Woodside Energy and Santos, two major players in the Australian oil and gas industry, have announced the termination of their discussions to create a potential A$80 billion global oil and gas giant. The decision comes after almost two months of due diligence and negotiations, during which the companies were unable to reach an agreement on valuation.
Woodside, with a market value and revenue more than twice that of Santos, emphasized its commitment to pursuing deals that would add value for its shareholders. In response to the news, Santos shares dropped by 5%, while Woodside’s stock rose by 2% on Wednesday.
Sources familiar with the matter, who requested anonymity due to the confidentiality of the information, revealed that the talks collapsed primarily due to disagreements over valuation levels. Despite the extensive negotiations, Woodside did not present a firm bid, leading to the breakdown of the discussions.
Santos issued a statement expressing that, following an initial exchange of information, they were unable to identify sufficient combination benefits to support a merger in the best interests of their shareholders. The company emphasized its strong balance sheet and ongoing commitment to exploring value-creating opportunities for its shareholders.
If the merger goes ahead, it will lead to the creation of the world’s largest liquefied natural gas (LNG) market, which will attract interest from foreign investors and interest in replacing gasoline with clean energy. Despite the failure of the negotiations, Woodside remains optimistic about the value creation potential of the global LNG market.
Woodside’s decision to abandon the merger was a relief to some investors, including investment manager Simon Mawhinney Allan Gray has a significant stake in Woodside. Mawhinney expressed satisfaction with the outcome, expressed concern about the benefits of the partnership and praised Woodside’s commitment to investment discipline.
The end of negotiations between Woodside and Santos highlights the challenges posed by major mergers and acquisitions in the oil and gas industry. Despite the joint venture’s initial expectations, the difference in costs and strategic priorities ultimately led to conflict.
Woodside and Santos are significant contributors to Australia’s carbon monoxide emissions and highlight the environmental impact of their actions. As the global energy landscape continues to change, companies in the oil and gas industry are bullish on balancing their financial decisions with sustainability goals.
Although the merger between Woodside and Santos has not yet been completed, the oil and gas industry remains strong; Companies continue to explore growth, efficiency and sustainability opportunities in a rapidly changing business environment.
