XRG-led group proposes $5.76 per share in cash to acquire Santos in potential $23 billion energy deal

Santos Limited (ASX: STO) has received a high-stakes takeover proposal from a global consortium led by Abu Dhabi-based XRG P.J.S.C., which includes Abu Dhabi Development Holding Company (ADQ) and the global investment firm Carlyle. The non-binding indicative offer, disclosed on June 16, 2025, proposes to acquire all issued shares of the Australian oil and gas producer at USD 5.76 per share, or AUD 8.89 based on recent exchange rates, through a scheme of arrangement.

The deal—if finalized—would be among the most significant acquisitions in Australia’s energy sector in recent years, with an indicative value exceeding USD 23 billion. While the proposal is not yet legally binding, the board of Santos confirmed it intends to recommend the offer to shareholders, provided that final terms are agreed and due diligence concludes satisfactorily. The proposal is subject to customary regulatory clearances, and its future will depend on whether a Scheme Implementation Agreement (SIA) is successfully negotiated between the parties.

How does the offer price compare to Santos’ recent trading performance?

The consortium’s cash offer of USD 5.76 per share significantly exceeds Santos’ recent market prices. On June 13, 2025, the stock closed at AUD 6.96, making the proposal a 28 percent premium over that day’s close. Further analysis shows the proposal offers a 30 percent premium to Santos’ one-week volume-weighted average price, a 34 percent premium over the one-month VWAP, and an even higher 44 percent over the three-month VWAP of AUD 6.19. Compared to the six-month VWAP of AUD 6.40, the bid offers a 39 percent uplift.

This latest approach is the third time the XRG-led group has proposed to acquire Santos. Earlier, in March 2025, the consortium made two preliminary proposals—first offering USD 5.04 and then USD 5.42 per share in cash—both of which were not accepted. The most recent offer has now been positioned as the consortium’s final non-binding indicative bid, signaling a firmer level of commitment and strategic intent.

What are the conditions and approvals required for the acquisition to proceed?

Despite the board’s openness to the proposal, the transaction is still at a preliminary stage and subject to a number of key conditions. XRG and its partners must complete confirmatory due diligence, which is contingent upon signing a Process and Exclusivity Deed that will govern access to sensitive information and negotiation terms. Santos has agreed to enter discussions on the exclusivity arrangement and an associated confidentiality agreement, paving the way for more formal negotiations.

If the exclusivity terms are agreed and the due diligence concludes without complications, the next milestone would be the execution of a binding Scheme Implementation Agreement. Following that, the acquisition would proceed to regulatory review by agencies including the Foreign Investment Review Board in Australia, the Australian Securities and Investments Commission, the Papua New Guinea Securities Commission, the Committee on Foreign Investment in the United States, and others. Only after these clearances and shareholder approval through a scheme vote would the deal become legally binding.

What strategic goals are driving the consortium’s interest in Santos?

The XRG-led group has articulated a clear rationale behind the proposed acquisition. According to their public statement, the consortium views Santos as a highly strategic asset in the global LNG value chain. The group intends to maintain Santos’ operational identity, including its Adelaide headquarters and core workforce, and to work closely with existing management to drive further growth. It also seeks to support Santos’ regional and international operations, particularly in the Asia-Pacific region.

Crucially, the consortium wants to expand Santos’ role as a stable supplier of gas and LNG, while accelerating its transition initiatives. The stated intention is to enhance investments in carbon capture and storage (CCS), low-carbon fuels, and the integration of AI technologies to drive operational efficiency. This dual focus on traditional gas infrastructure and future-facing sustainability positions Santos as an attractive platform for long-term energy security plays. In that context, analysts believe the proposed transaction is consistent with recent moves by sovereign-backed energy investors to build resilient LNG portfolios with built-in transition options.

What are institutional investors and analysts saying about the proposal?

While no individual analysts were named in the official statements, institutional sentiment around the deal appears broadly supportive, especially considering the premium offered. Market watchers have described the XRG bid as an “assertive but credible” entry that aligns with the ongoing global competition for gas-linked infrastructure. The offer’s generous valuation—especially in light of previous rejected proposals—has caught the attention of institutional shareholders, many of whom view Santos as a valuable combination of stable long-term cash flows and credible decarbonization capabilities.

From an investment perspective, this bid arrives at a time when international energy firms are increasingly focused on integrating traditional fossil assets with renewable and emissions-reducing technologies. Santos’ position as both a supplier of LNG and a player in low-carbon projects makes it a strategic fit for XRG’s broader ambition to create a globally integrated gas and LNG platform. Institutional investors appear particularly focused on the potential for value creation through enhanced capital investment, operational synergies, and expansion into new markets via the consortium’s financial backing.

What happens next in the Santos–XRG acquisition timeline?

As of now, no action is required from Santos shareholders. The board has committed to continuous disclosure and has stated it will keep shareholders informed as the proposal evolves. The next immediate step involves finalizing the terms of the exclusivity and confidentiality arrangements to enable confirmatory due diligence by the XRG-led group. If that proceeds to plan, a binding Scheme Implementation Agreement would be negotiated, leading to a formal shareholder vote.

The outcome of the transaction remains uncertain at this stage. However, the board’s initial endorsement—subject to the absence of a superior offer and confirmation from an independent expert that the transaction is fair and reasonable—suggests that there is a serious willingness to proceed if key conditions are met. Santos has retained Goldman Sachs and JB North & Co as financial advisers, with legal support from Herbert Smith Freehills Kramer. Rothschild & Co is serving as independent adviser to the board. The XRG consortium is advised by J.P. Morgan and represented legally by Linklaters and Allens.