Santos shares have jumped by more than 20 per cent after the US private equity firm aiming to buy the local oil and gas producer raised its bid for a third time to about $13.5 billion.
Shares in Santos soared on Tuesday after the company said Harbour Energy - an investment vehicle formed by American private equity firm EIG Global Energy Partners - had returned with an all-cash proposal worth $6.50 per share.
Santos shares rocketed from last week's closing price of $5.07 to as high as $6.20.
Santos has granted due diligence to Harbour but warned shareholders the proposal may still not result in an acceptable offer.
"Directors therefore advise that Santos shareholders take no action in relation to the Harbour proposal at this time," the company said on Tuesday.
"Regardless of the outcome of engagement with Harbour, the board and management remain focused on continuing to deliver shareholder value through the transformation of Santos into a low cost, reliable and high performance business with strong growth potential."
Harbour's initial proposal of $4.55 per share put forth in August last year was rejected by the board on the grounds that the bid was inadequate and the sources of funds were uncertain.
The current proposal is subject to a number of regulatory and financing conditions, including Foreign Investment Review Board approval.
Shares in Santos, which were worth more than $13 in 2014, were up $1.00, or 19.7 per cent, at $6.07 at 1151 AEST.
