Abu Dhabi National Oil Company (ADNOC) has made an $18.7 billion bid to acquire Australian fossil fuel producer Santos Ltd., marking one of the largest foreign takeover attempts in Australia’s energy sector.

The offer, which values Santos shares at A$5.76 each, a 28% premium to last Friday’s closing price, has been recommended by the board of Santos. The deal, however, remains subject to regulatory approval, particularly from Australia’s Foreign Investment Review Board (FIRB).

The proposal is spearheaded by ADNOC’s investment arm, XRG PJSC, in partnership with Abu Dhabi Development Holding Co. and U.S.-based private equity firm Carlyle Group Inc. If approved, the deal would give ADNOC a significant foothold in the Asia-Pacific energy market.

Strategic Value and Market Reaction

Santos, Australia’s second-largest fossil fuel producer, has long attracted takeover interest. CEO Kevin Gallagher has previously resisted multiple offers, including from Harbour Energy and Woodside Energy. Mounting investor frustration over stalled growth and underperformance has heightened pressure on the company to consider strategic alternatives.

Following the takeover announcement, Santos’ share price surged 11% on Monday to A$7.72 (still below the offer price) reflecting investor caution over the regulatory hurdles ahead.

The proposed acquisition aligns with ADNOC’s broader strategy to expand its global gas and LNG portfolio. “The transaction represents a significant step in ADNOC’s ambition to become a leader in the global gas business,” the consortium stated.

Regulatory Uncertainty Looms

The FIRB will review the offer to assess whether the transaction aligns with Australia’s national interest and security objectives. Approval from the board is critical for the deal to move forward.

A Treasury Department spokesperson emphasized that each foreign investment application is considered on a case-by-case basis. Analysts are divided on the likelihood of approval, citing rising scrutiny over foreign ownership in strategic sectors, including energy.

If cleared, the acquisition would mark one of the largest investments by a Middle Eastern entity in Australia’s energy infrastructure and could reshape regional gas markets.

Explore the Global Oil and Gas Market Trends with Blackridge Research

The Global Oil and Gas Market Report by Blackridge Research & Consulting offers a comprehensive analysis of the current market landscape, growth drivers, and emerging opportunities. This report provides valuable insights into key regional markets, competitive dynamics, and forecasts, making it an essential resource for stakeholders in the oil and gas industry.

Gain access to critical insights and stay ahead in the competitive oil and gas market. For customized solutions and exclusive offers, contact our expert research team.