20/08/2025

BIZ & FINANCE WEDNESDAY | AUG 20, 2025

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Santos flags delay in finalising US$18.7 billion Adnoc-led buyout SYDNEY: Santos said yesterday the consortium led by Abu Dhabi National Oil Co (Adnoc) will not be able to finalise its US$18.7 billion (RM79 billion) bid for the Australian gas producer for at least a month, well past the exclusive due diligence deadline. Shares in Santos, Australia’s second largest independent gas producer, fell as much as 3.5% to a more than five-week low of A$7.68 (RM21.05) as investors questioned whether the delay could kill the deal. “The market is telling you there’s increased risk and uncertainty,” said James Hood, Regal Funds Management’s senior energy analyst. Santos shares have traded con sistently well below the proposed offer of A$8.89 from the consortium led by Adnoc’s international investment arm XRG on June 16, which analysts have attributed to scepticism the transaction will proceed. Exclusive talks between Santos and the consortium, which includes Abu Dhabi Development Holding Company (ADQ) and private equity firm Carlyle, were due to finish on Friday. The consortium told Santos it would need at least four more weeks to secure all required approvals for its bid to be formalised. XRG said in a separate statement it would continue its due diligence and progress negotiations to reach a for malised offer. Taking into account net debt, the deal would give Santos an enterprise value of A$36.4 billion, which would make it the largest all-cash corporate buyout in Australian history, according to FactSet data. “This was never going to be an easy transaction to pull off with the con fluence of domestic energy security and national interest considerations as well as the multitude of hard to please stake holders involved,” said Kaushal Ramesh, vice-president, gas and LNG research at Rystad Energy. The deal requires approval from regulators in Australia, Papua New Guinea, and the US given Santos holds assets in each of those jurisdictions. Approval from Australia’s Foreign Investment Review Board could be a major hurdle for the transaction with the government likely to be wary to hand control of key energy assets to Middle Eastern investors, analysts said. Meanwhile, Santos said it would defer its interim earnings report to Aug 25. It had been due to be released today. – Reuters

China’s overcapacity crackdown faces litmus test

o Plan might run into opposition from small producers in solar sector, local governments

BEIJING: China’s efforts to curb industrial overcapacity face their first test in the indebted and bloated polysilicon sector, a key cog in solar cell production, where analysts say it is easiest for Beijing to intervene but still difficult to succeed. Under the plan, devised by industry players in the presence of Chinese regulators, big producers will pool 50 billion yuan (RM29.4 billion) to buy out the least efficient facilities and shut them down, then form a cartel to halt relentless price wars. Ideally, when prices rise, the loss-making producers will turn profitable and reimburse the debt incurred in the process. Reduced output and higher polysilicon costs would force solar panel makers – which can produce roughly twice as much annually as the world buys and have been a source of trade tensions between China and the West – to consolidate. But analysts see risks at every stage of this plan. First, it is unclear if the industry

between US$3.45 billion and US$3.55 billion (RM14.57 billion and RM15 billion) in the 2026 financial year, just short of a Visible Alpha consensus of US$3.56 billion. CSL said the restructure would save it up to US$550 million a year within three years, although it would incur a one-off pre-tax charge of up to US$770 million in the current financial year. The company said it would also buy back A$750 million (RM1.85 billion) of shares this financial year. It declared a final dividend of US$1.62 per share, up from US$1.45 per share declared a year ago. – Reuters analysts Tilly Zhang and Wei He said in a note. If the overcapacity crackdown “fails to get traction in polysilicon, it will struggle in the many other industries” where the government has less capacity to foster swift changes, they said. GCL’s peer Tongwei declined to comment. Polysilicon producers Daqo New Energy and TBEA did not respond to requests for comment. The solar and metals industry associations, the National Develop ment and Reform Commission (NDRC) – China’s state planner – and the Ministry of Industry and Information Technology also did not respond to requests for comment. Over the past five years, the top four Chinese manufacturers alone built about two-thirds of the industry’s capacity, which stood at 3.25 million metric tons at the end of 2024, according to Bernreuter Research, a consultancy. In 2025, Bernreuter anticipates an average utilisation of 35%-40%, down from 57% last year. Morningstar estimates about 965,000 tons of polysilicon capacity was built or is still under cons truction this year, citing the China Photovoltaic Industry Association. Past attempts to get the solar industry to self-regulate have failed. Last October, the solar industry body proposed a price floor for solar modules, but the temptation for manufacturers to undercut competitors proved too enticing. The NDRC called for a ban on new production in an online meeting in February. In the event that the polysilicon cartel overcomes industry and local government opposition, it can raise prices to levels that the least competitive firms in the down stream solar panels sector cannot afford, forcing their exit, analysts say. “Unless I see a lot of defaults all of a sudden really shrinking the size of the industry, I don’t see how this is going to work,” said Alicia Garcia Herrrero, Asia-Pacific chief eco nomist at Natixis. – Reuters

going to let go of their industry first?” said Max Zenglein, senior economist for the Asia-Pacific at The Conference Board research group. “They’re going to be very cautious.” Finally, even if the cartel does form, any success creates the con ditions for failure: after prices climb, members might be tempted to raise output and reap the profits. Reformers face all these risks despite the industry having fewer players and fewer supply chain inputs than most other sectors in the world’s second-largest eco nomy, where overcapacity is endemic and deflationary, and threatens trade relations and long term growth. “Success is hardly a foregone conclusion,” Gavekal Dragonomics

can agree who’s in or who’s out of the cartel. GCL Technology Holdings, one of the biggest producers, said earlier this month cartel planning was close to wrapping up but declined to provide details of the other participants. Banks – whose incentive to finance this acquisition is to ensure that what they rate as a “safe” sector doesn’t turn to “risky” – would likely be involved in the process, said Dan Wang, China director at Eurasia Group. Analysts warn local authorities, who have strived to fulfil Beijing’s strategic green energy vision by handing out subsidies, tax breaks and cheap land to the sector, may not want the solar supply chains on their turf to shut. “Which local government is

A view of solar panels at the Dunhuang Photovoltaic Industrial Park in Gansu province, China, in October 2024. Over the past five years, the top four Chinese manufacturers alone built about two-thirds of the industry’s capacity, – REUTERSPIC

CSL to shed up to 3,000 employees and spin off vaccine arm SYDNEY: Australian biotech CSL, the country’s fourth-largest company, said yesterday it would spin off its vaccine division and shed about 3,000 employees as it reels from “unpre cedented volatility”, sending its shares tumbling. US and converting it to medical treatments, CSL reported slower than-expected profit growth. The company said it closed 22 collection centres this month and would “consolidate” its research and development, all culminating in a reduction of up to 15% of workers outside its US plasma unit. McKenzie said the cost-cutting would “further reshape and simplify the business (and) provide a platform to renew CSL’s focus on our core strengths”. organisation, we will look at our supply chain and where the products come from”, McKenzie added. “Cutting back staff is normally a positive thing but I suspect that it will have an impact on earnings growth and that’s what the market seems to be focused on at the moment,“ said Craig Sidney, a senior investment advisor at Shaw and Partners.

On a call with analysts, McKenzie made only a passing reference to hefty tariffs on pharmaceutical imports threatened by US President Donald Trump, saying he didn’t believe they would apply to CSL because its core ingredient was sourced inside the US. For the company’s non-blood plasma products, “the active pharma ceutical ingredient is sourced in the US as well. For the other parts of the

The company, which makes most of its profit selling blood plasma treatments for rare illnesses, met analyst forecasts with a 14% increase in annual profit but said it was carving off its vaccine unit where profit dipped due to what its CEO called “highly irrational” softness in the United States. For its main earner, collecting blood from the public mostly in the

“Our business has grown this year despite an unprecedented level of challenge and volatility in our external operating environment,” CEO Paul McKenzie said in a statement. The company didn’t provide a valuation for the demerger, which it expects to complete in early 2026, but

The company’s future earnings guidance, which was just short of previous expectations, may also hurt the stock, Craig Wong-Pa, analyst at RBC Capital Markets, said. The former government laboratory forecast underlying annual earnings