Woodside & Santos scrap merger, latter says benefits “not identified”

Woodside (ASX:WDS) and Santos (ASX:STO) – energy majors around which much recent ado has been made regarding a potential merger – have decided not to try and make it work.

Woodside and Santos jointly released a WDS-branded statement this morning.

Shares for both stocks were green following the news despite an initial drop for Santos.

WDS shares were up 0.99 per cent to $32.61 at lunchtime.

STO shares reflected a 0.95 per cent increase to $7.94.

However, as of 1.40pm AEDT, Santos shares had dropped -5.21 per cent to $7.46.

Santos shareholders weren’t sure

Santos shareholders had been widely tipped as the likely lesser winners of the merger.

In layman’s terms, many wondered if Santos couldn’t deliver more value to shareholders by running ahead on its own for years to come, recent troubles be damned.

Woodside’s high valuation was the principal concern for STO holders, at the end of the day.

But I recently wrote about other headaches the merger could have faced.

The first and most obvious is Canberra, and, potentially the ACCC.

The merger would have made Woodside an $85 billion company. Don’t forget it merged with BHP Petroleum back in 2022, a ripper year for energy markets borne from COVID supply chain issues.

There could also have been some issues when both companies need to start reporting Scope 3 emissions.

No result

The news was released by Woodside in a fairly brief announcement issued late morning.

“Discussions with Santos did not result in a transaction,” the statement read, attributing this quote to CEO Meg O’Neill.

“We continue to be disciplined in our approach to mergers and … Woodside considers the global LNG sector provides significant potential for value.”

Read: Woodside would rather merge with someone else.

The deal as Santos sees it

Santos was second to release a statement to the market in the early afternoon.

The company says it didn’t see any real value in merging with Woodside.

“Following an initial exchange of information, sufficient combination benefits were not identified to support a merger that would be in the best interests of Santos shareholders,” the company wrote on Wednesday.

“We have a strong balance sheet and continue to review options to unlock value for shareholders.”

At 1.40pm AEDT on Wednesday, STO shares were down -5.21 per cent to $746.

WDS was up 1.61 per cent to $32.81 during the same window.