Updated May 23, 2018 13:25:45

Photo: Santos's Port Bonython hydrocarbon processing plant near Whyalla. (Supplied)

Santos took a beating on the Australian stock market, with its share price tumbling by almost 10 per cent in early trade.

In dollar terms, the company bled more than $1 billion in value.

This was the knee-jerk reaction of investors the morning after Santos rejected a takeover bid by Harbour Energy and "terminated all discussions" with the American company.

Its shares fell as low as $5.82 on Wednesday morning, their lowest value in more than six weeks.

In a statement released on Tuesday evening, Santos said its independent directors and chief executive had unanimously resolved to reject the $14.4 billion offer, which it said was "too low" and "high risk".

Harbour Energy has been trying to buy the Adelaide-based oil and gas producer since last August and in recent days upped its offer to about $7 per share.

"The final proposal was a highly leveraged private equity-backed structure that, prior to implementation, would have required Santos to provide significant support for Harbour's debt-raising and to hedge a significant proportion of oil-linked production," Santos said.

"In addition, the final proposal was stated to be subject to various conditions, including FIRB (Foreign Investment Review Board) approval."

Santos chairman Keith Spence said the company had "a well-developed strategy, strong leadership and management team and outstanding growth opportunities that the board believes will deliver superior value for its shareholders over time".

Three-quarters of Santos shareholders would have had to support the bid for it to be successful, including allied Chinese investors ENN and Hony Group, which own a combined 15 per cent.

Topics: business-economics-and-finance, oil-and-gas, industry, stockmarket, adelaide-5000, sa, united-states

First posted May 22, 2018 20:41:02