After bashing Scepter for its $6.88/share takeover offer, which Santos said could barely even be called a bid, the South Australian oiler has told Scepter they're welcome to come back with another offer, and it would be hard to refuse a $7-8/share bid.

"The door has been wide open for them to engage with us, but to date they've really not taken than opportunity of talking to us," Santos chief finance officer Andrew Seaton said yesterday.

Santos announced on Monday a $500 million private placement at a 15% premium to the last close to Hony, which will subscribe for just over 73.5 million fully paid ordinary Santos shares at $6.80/share - still 8c cheaper than the much-maligned Scepter offer.

Scepter's rejected offer came in on a "scheme of arrangement" - a standard clause in takeover offers which means it needs 75% of Santos' shareholders to approve it.

A company gaining a 10% share or more is generally seen as a disincentive for others to make a takeover bid, because in order to make a deal they'll have to ensure the company with the 10% or more stake is happy with it, according to corporate law.

Alternatively, that entity can squeeze the takeover bidder to up their offer if the bidder wants to remove the target from the Australian Securities Exchange.

RBC Capital Markets' Ben Wilson's said on Monday that "we think [announcement] could spell the end of Scepter's interest in Santos".

However, that applies to compulsory acquisitions.

The blocking stake does not over-ride a scheme of arrangement offer if, say, Santos were to engage with Scepter on another, better, offer and put it to shareholders for vote.

Seaton confirmed yesterday that "a 10% stake certainly doesn't block any formal scheme of arrangement".

"All of this talk of a blocking stake has been very much overplayed," he said, especially considering Oil Search having International Petroleum Investment Company (12.91%) and The Capital Group Companies (12.56%) on its register didn't seem to bother Woodside Petroleum making its all-share takeover offer for the Papua New Guinea-focused company.

Even then, there's nothing to say Hony will block anything anyway, if it thinks it can make money out of it.

While some analysts, including Wilson, believe Monday's suite of capital initiatives amounting to $3.5 billion - especially the part where Hony took 7.9% in Santos - appeared to be an attempt to takeover proof the company, others differ.

Hony also agreed not to take more than 9.9% of Santos for three months.

While Scepter's offer was 8c more per share than what Hony's placement was worth, the adjusted value of Scepter's indicative proposal post-placement and entitlement offer is $10.6 billion.

Further analysis can reveal that the adjusted post-placement and entitlement offer, Scepter's proposal is actually worth $5.75/share, while Hony's placement was worth $5.71/share (blended entry price).

While it's still slightly lower than Scepter's offer, these numbers reveal the Arab syndicate's offer wasn't that great after all.

Importantly, though, Hony has also agreed not to divest to any unrelated party any of its shares in Santos acquired through the placement and entitlement offer for 12 months, without Santos' consent, subject to "limited exceptions".

Even then, if Santos' board tells its shareholders it recommends that a particular offer be negotiated further and put it to shareholders, that could well be a condition where Hony is allowed to sell.

Like many analysts, Wilson admitted to being surprised by how quickly Santos knocked back the offer, which led RBC to believe that Santos was "possibly already in the advanced stages of securing Hony Capital as a major investor and in selling the Kipper asset to Mitsui when the Scepter bid came through".

"This could be one possible reason for Santos rejecting the Scepter approach - the company may have feared that any serious attempt to engage with Scepter may have derailed the deals with Mitsui (Kipper) and/or Hony Capital," Wilson added.

He conceded, however, that given the placement to Hony represents 7.9% of the expanded Santos capital base and is not quite a blocking stake, the door is "slightly ajar" for Scepter partners to return with an updated bid.

"We think this is possible but unlikely given we believe Scepter is seeking a board recommendation and has already been rejected once in preference to the package of measures announced," Wilson said.

The aforementioned investment advisor said that with the current capital raise, Santos was "definitely buying more time to get its ducks in a row, but I'm seriously wondering if Santos' management team really did everything it could to come to an agreement with Scepter Partners".

"I think a large part of Santos' shareholders would probably have preferred to tender their shares to the bid instead of having to cough up more cash to keep the company afloat," the adviser added.

Argonaut oil and gas analyst Philipp M-O Kin also saw the door being left ajar, if not wide open, for Scepter, given private equity's focus on rapid profits.

"If Scepter now put an offer of $8/share [for Santos], what would that do to Hony's position?" M-O Kin pondered.

"Considering the strategic review that was underway and the intense amount of scrutiny, I would've thought it would have been in their interest to provide a bit more detail as to why Scepter's bid was such a non-starter [when Santos first announced it had rejected the bid on October 22].

"Given how highly dilutive that $3.85 was, I don't see why $6.88 was such a bad option."

Investment research firm Bernstein went some way towards answering this question following Monday's announcement.

"Santos rejection of the Scepter bid was based on (a) a belief that there more long term value to shareholders through addressing the balance sheet issues and waiting for the recovery in commodity prices than the Scepter offer, and (b) that the bid was highly conditional, incomplete and done with little or no engagement with the board. Essentially Santos deemed this to be a non-bid," Bernstein said.

The intrigue, M-O Kin said, was around Hony and its intentions.

Though many would know the Chinese are long-term strategists, and their arrival on the register fits in just fine with outgoing CEO David Knox' intentions for Santos to become a major LNG player in the growing Asian market, who could refuse a quick profit, especially amid such low oil prices?

His comments give extra intrigue to Morgans Financial senior research analyst Adrian Prendergast's comments to Energy News as Santos announced it had rejected Scepter's offer on October 22, that the offer would be "worthwhile" if Santos did end up raising $2 billion or more in equity - which is exactly what it's now doing.

"We recently did different valuation scenarios, and today's bid does undercut the value in all the scenarios except if Santos was to raise $2 billion or more in new equity," Prendergast told Energy News the morning Santos announced it had rejected Scepter's bid.