Australia’s energy sector has seen plenty of megadeals. But none like this.

Abu Dhabi National Oil Company (ADNOC) and partners had tabled a $36.4bn all-cash offer for Santos, pitched at $8.89 a share and a 28% premium.

Had it landed, it would have been the largest cash buyout in Australian corporate history — with Allens, Linklaters and Herbert Smith Freehills steering the legal work on each side.

But after months of delays and two exclusivity extensions, the bid collapsed.

What looked like a landmark deal has now joined the long list of aborted Australian mega-transactions.

Here’s how the deal unfolded.

This wasn’t the first time Santos had been in play.

In late 2023, Santos entered talks with Woodside Energy, the country’s largest oil & gas company, on a proposed $80bn merger-of-equals. By February 2024, the deal had fallen apart.

King & Wood Mallesons advised Woodside, while Herbert Smith Freehills acted for Santos.

Woodside, more than twice Santos’ size, refused to pay a takeover premium. CEO Meg O’Neill made clear any deal had to clearly benefit Woodside shareholders. Investors agreed. One fund manager called Woodside’s decision to walk away “a relief.”

The collapse left Santos trading below peers, actively reviewing ways to unlock value. That created the opening for ADNOC.

Where Woodside balked, ADNOC leaned in — it was initially “willing to deal on non-commercial terms” to lock down LNG assets it viewed as strategic.

Back in March, ADNOC’s investment arm XRG made two confidential offers — $8.00 and $8.60 a share. Both were rejected.

The “final” cash pitch at $8.89 brought Santos to the table. By June, the board granted exclusivity and opened its books.

The lawyers for ADNOC and Santos reflected long-standing relationships.

On the buy side: Linklaters and alliance partner Allens. Allens partners Vijay Cugati and Tom Story teamed up with Linklaters partners Nicholas Edwards, Patrick Sutton-Mattocks and Ben Suen.

It was a logical pairing: Linklaters boasts deep M&A expertise and a long Middle East presence, with offices in Abu Dhabi, Dubai and Riyadh, while Allens offered heavyweight expertise in Australia.

Track record helped too. ADNOC had been on a global expansion spree, including its $16bn Covestro acquisition in 2024, where Freshfields acted for ADNOC and Linklaters was on the other side. Meanwhile, Allens had advised Oil Search on its 2021 merger with Santos.

Inside ADNOC, the deal was code-named Project Emerald.

On the sell side: Herbert Smith Freehills Kramer, Santos’ go-to adviser for over a decade. Veteran energy partner Robert Merrick was leading, backed by competition and regulatory specialists.

In addition to the potential Woodside deal, the firm had already advised Santos on its $22bn Oil Search merger in 2021 and $2.9bn Quadrant Energy acquisition in 2018. That history gave HSF Kramer deep knowledge of Santos’ assets.

For Santos, it was Project Sapphire.

The process was extensive. At one point more than 500 people were involved in due diligence. Safe to say, the deal would have delivered hefty fees for both firms. And fees aside, the mandates also boosted their status — propelling HSF Kramer to #1 and Allens to #2 in Mergermarket’s league tables.

The deal unravelled with a letter.

Chair Keith Spence wrote to ADNOC boss Sultan Al Jaber, reaffirming the $8.89 offer price but demanding that ADNOC:

To ADNOC, the letter read as a “take it or leave it” ultimatum. Al Jaber fired back, demanding a $300m discount to the bid price to offset the PNG tax hit. Neither side moved.

Trust had already been fraying. A methane leak at Darwin LNG, known internally for years but only revealed publicly weeks earlier, unsettled ADNOC.

And on Monday, 15 September, ADNOC strategist Mohamed Al Aryani abruptly cancelled an on-the-record press interview promised to Australian journalists, saying nothing could be published.

Hours later, Spence’s letter landed, hardening ADNOC’s view that the risks were being shifted unfairly onto ADNOC.

By Wednesday, the bid was dead.

At 8:30pm Sydney time, CEO Kevin Gallagher got the call: ADNOC was walking. By 9:00pm, the consortium had gone public. Santos was blindsided and scrambled until 2:00am to issue its own response.

Markets punished Santos. Shares plunged 12 per cent in a day, wiping $3bn in value and sinking to their lowest since June.

It’s the third failed bid under Gallagher and chair Keith Spence, after Harbour in 2018 and Woodside in 2024. With investor patience shot, leadership change “may become unavoidable.”