Talks with U.S.-based Harbour Energy were terminated after shareholders rejected a full-stock takeover offer, Australian energy company Santos said.

The Australian subsidiary of Harbour last week offered $4.98 (USD) per share for an all-stock takeover of Santos. The Australian company said Monday it was reviewing an offer of $5.21 per share and Harbour said it would consider as much as $5.25 per share.

"The Santos independent directors and managing director & CEO have unanimously resolved to reject the final proposal on the basis that it does not represent a full value of the company and, when combined with the associated risks, is not in the best interests of Santos shareholders," the Australian company said in its statement Tuesday. "Accordingly, Santos has now terminated all discussions with Harbour Energy."

Santos closed trading on the Australian exchange at $4.89 per share.

When Harbour made its initial bid on Santos, the U.S.-based company said it wanted to take advantage of the holdings of the Australian company to become a leader in the liquefied natural gas sector. The third-largest oil and gas producer in Australia, Santos leads a multi-billion effort to convert coal seam natural gas to LNG for exports to the global market.

Australia's position in the region gives it an advantage in tapping into the growing demand for LNG for many of the island economies in the Asia-Pacific. Without new operations, Royal Dutch Shell said the global market for LNG supply could slip into a deficit by the middle of the next decade.

Harbour had no statement on the rejection from Santos.

Santos reported full-year 2017 underlying profit of $336 million, up 433 percent from the previous period. Cash flow was up 49 percent to $1.2 billion.

Two years ago, Santos reported losses for the first half of the year were $1.1 billion, against income of $30 million during the same period the previous year.

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