Shares in oil and gas giant Santos have rocketed on the back of a takeover bid from an Abu Dhabi led consortium, but the deal may depend on winning over a state government.
Shares in Adelaide-headquartered Santos have soared after receiving a $30 billion takeover bid from a consortium led by Abu Dhabi National Oil Company and the deal has an early blessing from the board.
But shareholders and the board will have to keep the champagne on ice, as any transfer of licence holders under the South Australian Petroleum and Geothermal Energy Act must be signed off by the state's energy minister.
Santos was one of SA's most significant companies and a major employer in the state, Premier Peter Malinauskas said.
"The state government's priority at all times is to ensure that South Australian jobs remain in South Australia, and to maintain Santos' headquarters in Adelaide," Mr Malinauskas said.
"Any judgments we make regarding this process will be made in the state's best interests."
Santos employs almost 4,000 people at its operations across Australia, Papua New Guinea, East Timor and the United States.
The premier and Mining and Energy Minister Tom Koutsantonis said they were working constructively with the consortium.
"Just as Santos must act in the best interests of its shareholders, the SA government will act in the best interests of South Australians," Mr Koutsantonis said.
XRG Consortium, a subsidiary of Abu Dhabi National Oil Company including Abu Dhabi Development Holding Company and private equity giant Carlyle, made the non-binding proposal to acquire Santos for US$5.76 (A$8.89) per Santos share via an arrangement scheme.
The offer represents a 28 per cent premium to Friday's $6.96 closing price, winning the early thumbs up from Santos' board.
"The Santos board confirms that, subject to reaching agreement on acceptable terms of a binding scheme implementation agreement, it intends to unanimously recommend that Santos shareholders vote in favour of the potential transaction," the board wrote.
Abu Dhabi National Oil has expressed interest in acquiring Santos since July 2024, after negotiations of a potential merger between Santos and local competitor Woodside wound up in February 2024.
Santos shareholders will not be required to respond to the proposal and there is no guarantee XRG Consortium will enter into a binding agreement.
"Santos will continue to keep its shareholders informed in accordance with its continuous disclosure obligations," the board wrote.
The federal coalition called on Treasurer Jim Chalmers to explain if the deal was in the national interest, noting Santos operated critical energy infrastructure in Australia.
"The Australian public has a right to know what this deal means for energy security, for Australian jobs, and for the long-term control of our key economic assets," opposition treasury spokesman James Paterson said a statement.
