Earlier this month, Santos received a non-binding indicative proposal from the XRG consortium, which includes Abu Dhabi Development Holding Company (ADQ) and US-based investment firm Carlyle.
The proposal is for the acquisition of all of the ordinary shares on issue in Santos for a cash offer price of $5.76 per Santos share via a scheme of arrangement.
Santos announced in a statement on June 27 that it has entered into a process and exclusivity deed with the consortium.
The company said the process deed “governs the basis upon which the XRG consortium will have the opportunity to undertake due diligence and provides for the parties to negotiate in good faith, in parallel with the due diligence, a binding scheme implementation deed (SID) to implement the potential transaction.”
According to Santos, the consortium has been granted exclusive due diligence access for a period of six weeks, starting June 27.
The exclusivity provisions include customary “no shop”, “no talk”, “no due diligence”, and “notification” obligations that apply during the exclusivity period.
Moreover, a fiduciary exception applies enabling the Santos board to deal with potentially superior proposals from competing acquirers from the date that is four weeks from June 27.
The XRG consortium has also agreed to a confidentiality agreement with Santos.
Santos noted that there is no certainty that the consortium will enter into a binding SID or that a potential transaction will proceed.
Last year, Santos and its compatriot, Woodside, ceased talks regarding a potential merger, which would have created a merged energy and LNG giant.
In 2021, Santos completed its merger deal with PNG-focused Oil Search.
With this move, Santos increased its stake in the PNG LNG project.
The company operates the Gladstone LNG plant and the Darwin LNG plant.
The Barossa gas project, which will supply feed gas to the Santos-operated Darwin LNG plant, is in the final stages of commissioning and remains on target for first production in the third quarter of 2025.
