Saudi Aramco is considering a takeover bid for Australian energy major Santos, Bloomberg reported, citing unnamed sources. The sources also revealed that the UAE’s Adnoc is studying an offer for Santos.
These potential bids demonstrate Middle Eastern energy companies’ interest in expanding their natural gas business internationally, the report said. This development makes Santos a popular acquisition target after local rival Woodside tried to take over the company earlier this year.
News of a possible merger between the two Australian energy majors first surfaced in December when the companies confirmed they were discussing a merger. This followed two major deals recently closed by Exxon and Chevron in the U.S.
However, talks between Santos and Woodside broke down by February as Woodside investors were concerned about paying a hefty premium for Santos’ shares. “We continue to be disciplined in our approach to mergers and acquisitions and capital management to create and deliver value for shareholders,” Woodside chief executive Meg O’Neill said in a statement at the time.
Reuters reported that Santos had a market cap of approximately $16.63 billion as of Wednesday, which increased after news of the potential bids broke earlier today.
Santos is an attractive target for potential buyers due to its LNG business, which includes the Darwin LNG and Gladstone LNG projects in Australia, and the PNG LNG project in Papua New Guinea. “I think Santos is an attractively priced company with a handful of great assets, but despite this, I find it hard to imagine a would-be buyer flagging its interest prior to making an offer,” Simon Mawhinney, managing director of Allan Gray, told Reuters.
Aramco recently entered the LNG market by signing a non-binding agreement to buy a 25% stake in Sempra Energy’s Port Arthur LNG project. Additionally, it signed a deal to buy LNG from NextDecade’s Rio Grande LNG facility on a long-term basis.