U.S.-based Harbour Energy Ltd. made a final offer of $10.8 billion for Australia's Santos Ltd. on May 21, hiking its bid for the fifth time in nine months after a steep rise in oil prices and potentially deterring any rival bids.

Shares in the oil and gas producer rose on the back of the sweetened bid but remained below the offer price amid uncertainty over whether the government would approve what would be the biggest takeover of an Australian resources company.

"You've got to think the new bump is going to make it more likely the board will approve it...But there are risks," said Andy Forster, senior investment officer at Argo Investments, a top 10 shareholder in Santos.

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Analysts have said the government might raise concerns that a takeover could dent gas supply on Australia's east coast and could even raise questions about foreign companies not paying enough tax in Australia.

A successful bid would give Harbour access to a recently revived company with a low cost of gas production and stakes in LNG in the Asia-Pacific, where demand is soaring.

Harbour's latest offer, raised twice over the past five days, is equivalent to A$6.95 a share at an exchange rate of 75 U.S. cents to 1 Australian dollar, and is at an 11% premium to the last close of Santos shares on Friday.

"The new higher bids underline Harbour's desire to receive the board recommendation it needs and in our view staves off any ambitions from an interloper," Royal Bank of Canada analysts said in a note on May 21.

Argo's Forster said the prospect of receiving a special dividend with Australian tax credits attached as part of the bid was attractive. The special dividend would take the total bid value for local investors to around A$7.15 a share.

The latest proposal, up 4.6% from an earlier offer, is conditional on Santos increasing its hedging of oil-linked production in 2018 and 2019, Santos and Harbour said.

Harbour said the offer price would be increased slightly to a U.S. dollar amount equivalent to A$7.00 per share if Santos agreed to hedge 30% of oil-linked production in 2020, too.

"Harbour's 21 May 2018 proposal is 'best and final' and will not be further increased prior to entering into a Scheme Implementation Deed," Harbour said in an emailed statement.

The requirement for Adelaide-based Santos to lock in more of its oil-linked contracts at today's higher oil prices will help protect cash flows needed to pay down debt.

Harbour wants Santos to line up the hedges as the Australian company can do it more cheaply than Harbour can, a person close to the transaction said.

"This additional hedging is not required to support Harbour's financing, but rather enables us to reduce transaction costs and increase the offer price," Harbour said.

Oil prices have risen about 17% since Santos received Harbour's $4.98 per share offer in April.

Independent directors of Santos will consider the revised Harbour proposal, the company said.