Abu Dhabi’s state-owned oil company, Adnoc, has abandoned its $18.7 billion bid for Santos, one of Australia’s largest energy producers, after negotiations stalled, the Financial Times reported.
The deal, first announced in June, would have marked Australia’s biggest-ever takeover and significantly expanded the international gas business of XRG, Adnoc’s overseas investment arm.
According to XRG, the decision to withdraw was “purely commercial,” influenced by several factors affecting its valuation of Santos. Sources familiar with the negotiations told the Financial Times that Santos had insisted XRG and its partners, including Carlyle, cover any capital gains tax liabilities, and had failed to disclose a long-running methane leak at its Darwin liquefied natural gas plant—information the consortium only discovered through media reports.
While domestic political opposition to foreign ownership of Australian energy assets had fueled speculation about the deal’s viability, XRG officials emphasized the withdrawal was not driven by politics. “Santos had been inflexible and unrealistic,” one source said, noting this was the third attempt by a company or consortium to acquire Santos.
The deal required approval from Australia’s Foreign Investment Review Board, state governments, and ultimately Treasurer Jim Chalmers, who described the bid in June as “a big transaction in a sensitive area.” Analysts suggest the government may have signaled that approval would not be straightforward, adding to XRG’s decision to walk away.
The collapse of the deal marks another setback for Adelaide-based Santos, which last year engaged in unsuccessful talks with domestic rival Woodside. Analysts now say questions will arise about Santos’s valuation and potential hidden issues, particularly as XRG was a less price-sensitive buyer than most yet still could not complete the acquisition.
Santos did not immediately respond to requests for comment.
