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China Gas attracts US$2.2b
By Richard Fu |
December 14, 2011, Wednesday
|
Print Edition
Print Edition
CHINA Petroleum and Chemical Corp and ENN Energy Holdings have offered up to HK$16.7 billion (US$2.2 billion) for Hong Kong-listed gas distributor China Gas Holdings Ltd as they aim to boost their presence in the booming Chinese mainland gas market.
The deal may give Sinopec, as China Petroleum is better known, access to more downstream gas distribution assets and help it evolve into an integrated energy company. The agreement also followed a Monday announcement by Sinopec's parent, China Petrochemical Corp, to increase holdings in an Australian liquefied natural gas export venture.
Sinopec and ENN bid HK$3.50 a share for all the outstanding shares of China Gas, which supplies piped-gas on the Chinese mainland, according to a filing to the Hong Kong stock exchange yesterday. Their offer marked a 25 percent premium to China Gas's last closing price.
ENN, a Hong Kong-listed piped-gas distributor, will finance 55 percent of the deal while Sinopec, which already owns 4.8 percent of China Gas, will cover 45 percent, according to the filing. That would result in ENN controlling 52.4 percent of the company and Sinopec 47.6 percent if the bid succeeds.
The bidders said they would try to maintain China Gas's listing status by leaving not less than 25 percent in public hands. That means Sinopec and ENN may have to issue new shares after the acquisition.
ENN said the transaction will help improve the management efficiency, reduce costs and optimize the use of resources for it and China Gas.
But analysts said operational synergies are limited to a bigger bargaining power when buying fuel and equipment from suppliers.
"The acquisition does not allow ENN to eliminate all of China Gas's head office cost as a surviving separate operating unit will emerge from the transaction," analysts at Sandord C. Bernstein wrote in a note.
The deal may give Sinopec, as China Petroleum is better known, access to more downstream gas distribution assets and help it evolve into an integrated energy company. The agreement also followed a Monday announcement by Sinopec's parent, China Petrochemical Corp, to increase holdings in an Australian liquefied natural gas export venture.
Sinopec and ENN bid HK$3.50 a share for all the outstanding shares of China Gas, which supplies piped-gas on the Chinese mainland, according to a filing to the Hong Kong stock exchange yesterday. Their offer marked a 25 percent premium to China Gas's last closing price.
ENN, a Hong Kong-listed piped-gas distributor, will finance 55 percent of the deal while Sinopec, which already owns 4.8 percent of China Gas, will cover 45 percent, according to the filing. That would result in ENN controlling 52.4 percent of the company and Sinopec 47.6 percent if the bid succeeds.
The bidders said they would try to maintain China Gas's listing status by leaving not less than 25 percent in public hands. That means Sinopec and ENN may have to issue new shares after the acquisition.
ENN said the transaction will help improve the management efficiency, reduce costs and optimize the use of resources for it and China Gas.
But analysts said operational synergies are limited to a bigger bargaining power when buying fuel and equipment from suppliers.
"The acquisition does not allow ENN to eliminate all of China Gas's head office cost as a surviving separate operating unit will emerge from the transaction," analysts at Sandord C. Bernstein wrote in a note.
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