Broker Jarden has downgraded Santos to an “underweight” rating from “overweight” following the withdrawal of Abu Dhabi National Oil Co’s (ADNOC) $36 billion takeover offer for the Australian oil and gas producer. Santos is the country’s second-largest oil and gas producer, supplying energy to homes and businesses. The company also explores and develops natural gas resources across Australia and internationally.
Just two days before the deadline for a binding deal, XRG, the foreign investment arm of ADNOC, announced it would not proceed with a binding offer. Jarden analysts anticipate a decline in Santos’ share price following the withdrawal of the $8.42 per share indicative offer.
The broker has significantly reduced its 12-month price target for the stock, which had previously factored in the potential takeover. The target price was slashed by 16 per cent, from $8.40 to $7.05.
According to Jarden, Santos had been trading at a significant discount, with a closing price of $7.65 on September 17. Jarden analysts believe the market will need time to adjust to the news, with shareholders likely to question management about the failed deal and the company’s future direction on the ASX.
