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August 13, 2009

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Sinopec gains approval for Addax takeover

SINOPEC has won Chinese government approval of its US$7.5 billion takeover of Addax Petroleum, a deal aimed at securing added production capacity and coveted reserves in west Africa and the Middle East.

In a statement on its Website, Addax said it had received confirmation from Sinopec of the expected approval from the National Development and Reform Commission.

The deal was reportedly valued at US$7.5 billion.

The offer is still subject to approval by holders of two-thirds of Addax Petroleum shares, it said.

The deal is the largest ever overseas takeover by a Chinese company, although it is only half the size of last year's acquisition by Aluminum Corp of China, with Alcoa Corp, of a 12 percent stake in global miner Rio Tinto Plc. That deal was worth US$14.3 billion.

Sinopec, formally known as China Petroleum and Chemical Corp, has been seeking to boost crude oil production as a cushion against spikes in global oil prices that have caused it billions in losses due to caps on domestic fuel prices.

The biggest takeover before Sinopec's bid for Addax was offshore oil services provider China Oilfield Services' acquisition last year of Norway's Awilco Offshore, in a deal valued at US$2.5 billion.

Geneva-based Addax's oil and gas exploration and production is based mainly in west Africa and the Middle East, including joint operation of the Taq Taq field in Iraq's self-ruled Kurdish region with Turkey's Genel Enerji.

The company, which is listed on exchanges in London and Toronto, said Sinopec, China's largest refiner by capacity, promised to keep Addax's top management intact.


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