Stock of the day: Santos 

(AI video summary)

This video was created on 16 June 2025 for IG audiences by ausbiz.

ASX code: STO

A surprise bid for Santos

Santos Limited shares rallied after a takeover proposal was announced by a subsidiary of the Abu Dhabi National Oil Company. The offer, at $8.89 per share, represents a 28% premium to the company’s last closing price.

While the bid is non-binding and indicative, Santos has granted the consortium due diligence access, and the Board has stated its intention to recommend shareholders accept the proposal if it progresses.

Strategic failure exposed

Analysts see the bid as a reflection of strategic failure, not success. The offer merely returns the share price to 2023 levels.

Calls to split the business and unlock the high-quality ​liquefied natural gas (LNG) division have long been ignored. The company continues to carry underperforming assets, including the ageing Cooper Basin and high-cost oil projects. 

Investment outlook

While Santos’s asset value may be closer to $11 – $12 per share, analysts say that value is unlikely to be realised by current shareholders. If the Foreign Investment Review Board (FIRB) blocks the bid, pressure will mount on the Board to take decisive action.

The bid coincides with renewed interest in energy. Crude oil prices are up over 30% since May, supporting a supply-driven rebound.

Fund managers have shifted into:

• Woodside Energy (ASX:WDS)
• Karoon Energy (ASX:KAR)
• Paladin Energy (ASX:PDN)
• New Hope (ASX:NHC)