Sinopec, ENN Extend Deadline for Talks on Joint Bid for China Gas to Sept 6
08/06/2012| 08:50pm US/Eastern
By Yvonne Lee
HONG KONG--China Petroleum & Chemical Corp. (0386.HK), or Sinopec, and gas supplier ENN Energy Holdings Ltd. (2688.HK) said Monday they have extended the deadline for the completion of negotiations on their US$2.15 billion planned acquisition of China Gas Holdings Ltd. (0384.HK).
The two companies said they have postponed the deadline, which was due to lapse Monday, by another month to Sept. 6.
Even though the deadline has been extended, the proposed acquisition of China Gas is likely to fail following the return of China Gas's co-founder Liu Minghui and the large change in its shareholding structure in the past eight months.
China Gas said on July 30 Mr. Liu will join the firm again as a director with effect from Aug. 17, after he was formally cleared of embezzlement allegations in China.
Following Mr. Liu's arrest, shares of China Gas, the nation's third-biggest gas distributor by sales plummeted nearly 50%, creating an opening for a hostile bid from Sinopec and ENN Energy.
Despite his arrest, Mr. Liu had been trying to stop the takeover by buying up shares in his former company. He was joined by London-listed energy company Fortune Oil PLC (>> Fortune Oil plc), which began purchasing China Gas stock when the deal was proposed publicly and now owns around 16% of the company with Mr. Liu.
In recent months, Beijing Enterprises Group Co., which owns a natural-gas distributor in China's capital, has also been amassing a China Gas stake; in July its holding stood at 20.3%.
Their buying has helped push China Gas's share price past HK$4, well above the HK$3.50 offered by Sinopec and ENN. China Gas ended at HK$4.26 Monday.
China Gas--which controls gas pipelines serving more than 6 million customers in China--initially rejected the offer, made in December, saying the HK$3.50 a share offer was "wholly unsolicited, opportunistic" and failed "to reflect its fundamental value."
China Gas President Eric Leung said at the time the offer was "wholly unacceptable."
Write to Yvonne Lee at email@example.com