SYDNEY: Australian gas producer Santos' shares fell as much as 13.6% on Thursday after a consortium led by Abu Dhabi's ADNOC scrapped its $18.7 billion bid for the company, saying commercial terms could not be agreed.

Santos said in the statement early on Thursday it told the XRG consortium on Monday it was willing to finalise a deal at $5.626 a share.

The original offer in June was made at $5.76 a share, worth A$8.89 at the time, but adjusted for Santos' recent dividend payment.

Santos shares dropped to A$6.61 in early trading Thursday, their lowest price since June 10 and headed for their worst day in more than five years. The benchmark S&P/ASX200 was down 0.9%.

XRG pulled the offer on Wednesday and said "a combination of factors, when considered collectively, have impacted the Consortium's assessment of its indicative offer."

Taking into account net debt, the deal valued Santos at about A$36.4 billion ($24.2 billion), which would have made it the largest all-cash corporate buyout in Australian history, according to FactSet data.

The deal's collapse will now put pressure on Santos' board, given it was the third offer from a buyer in the past seven years not to proceed.

"Another failed transaction creates doubt in the market. It's unlikely Santos remains in its current form in time with investors and management looking for alternative ways to create value,' said Adam Martin, an analyst at E&P.

Santos previously rejected a $10.8 billion offer from private equity-backed Harbour Energy in 2018 and walked away from talks with its bigger Australian rival Woodside Energy , to create a possible A$80 billion oil and gas giant.

"Santos has a clear strategy, strong leadership and high-quality growth opportunities across our global portfolio. The board is confident these strengths will deliver long-term value for shareholders," Santos Chair Keith Spence said in the statement.

Jarden, the investment bank, on Thursday downgraded its rating on Santos from overweight to underweight following XRG's exit. Jarden cut Santos' 12-month price target by 16% from A$8.40 to A$7.05 per share.

"We expect Santos shareholders to be bruised by the sudden withdrawal of the proposed takeover offer and ask the board and management questions regarding negotiation tactics over the past few weeks," Jarden analyst Nik Burns said.

"We anticipate share price weakness in response to this news, but also would expect investors to take advantage of any material sell-off if they believe the stock looks oversold." ($1 = 1.5035 Australian dollars) (Reporting by Scott Murdoch; Editing by Lincoln Feast and Sonali Paul)