China Gas to Buy Fortune Oil Gas Unit for $400 Million
By Aibing Guo & Benjamin Haas - Dec 17, 2012 12:13 PM GMT+0100.
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China Gas Holdings Ltd. (384), the supplier of natural gas to 172 Chinese cities, will buy Fortune Oil Plc’s Chinese natural gas operations for $400 million, expanding its service territory across China.
Fortune Oil will receive $200 million in cash and either a $200 million deferred payment or 250 million shares of China Gas, the Hong Kong-based company said today in a statement. The deferred amount will earn an annual interest of 6 percent from the date the transaction is completed. Fortune Oil had a 181 million pound ($293 million) market value as of Dec. 14.
The deal will give China Gas pipelines across Beijing, Tianjin, Chongqing and seven Chinese provinces, a coal bed methane block in Shanxi and compressed and liquefied natural gas operations. China Gas, which blocked a $2 billion bid from China Petroleum & Chemical Corp. (600028) and ENN Energy Holdings Ltd. (2688) with Fortune’s backing in October, is looking at acquisitions to expand after interim profit doubled, Chief Financial Officer Eric Leung said in a Bloomberg TV interview last month.
“This will be very good for China Gas,” said Yan Shi, an analyst at UOB-Kay Hian Ltd. in Shanghai. “They’re increasing their customer base and they’ve worked with Fortune Oil before to fend off the Sinopec takeover attempt, so it’ll be easy to integrate the businesses.”
Fortune Oil surged as much as 48 percent in London to 13.50 pence, the biggest jump since May 21, 1993, and traded up 21 percent at 11 pence as of 11:10 a.m. local time. China Gas shares were suspended from trading today in Hong Kong.
Higher Bid
Fortune Oil had teamed up with investors including China Gas Founder Liu Minghui to buy China Gas shares at prices higher than the HK$3.50 Sinopec and ENN Energy offered in December 2011.
Fortune Oil and China Gas Group held 18.4 percent of the total issued shares in China Gas, the company said in its third- quarter statement on Nov. 19. It didn’t mention the stake owned by Minghui, who was reinstated as managing director on Aug. 20 after being arrested in December 2010 on suspicion of embezzling company assets.
“Fortune Oil will continue to have access, through its shareholding in China Gas, into the fastest growing natural gas market in the world with an even larger platform,” Fortune Chief Executive Officer Tee Kiam Poo said in the statement. “Together we aim to accelerate China Gas’s share of the China natural gas market.”
Wilmar Stake
Wilmar International Ltd. (WIL), a Singapore-based edible oil refiner and processor, will transfer its 15 percent stake in Fortune’s gas unit to China Gas.
As part of the deal, Fortune Oil can nominate two directors to China Gas, including the managing director, the company said in the statement. The deal is subject to approval by shareholders of both companies and Chinese regulators. Fortune’s board said it would recommend shareholder approve the deal, according to the statement.
The money raised in the sale will be used to pay down Fortune Oil’s debt. BNP Paribas SA and Oriel Securities Ltd. advised Fortune Oil on the deal.
To contact the reporters on this story: Aibing Guo in Hong Kong at aguo10@bloomberg.net; Benjamin Haas in Hong Kong at bhaas7@bloomberg.net
To contact the editor responsible for this story: Andrew Hobbs at ahobbs4@bloomberg.net |
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