SK, Deutsche Bank Vying for China Gas

Several new comers South Korea's SK Group, Deutsche Bank, and London-listed Fortune Oil have now joined the bidding battle for Hong Kong-based China Gas Holdings Ltd. (sehk:0384).

On December 13, 2011, ENN Energy Holdings Ltd. (sehk:2688) and China Petroleum & Chemical Corp. (Sinopec, SHSE: 600028, SEHK: 0386, NYSE: SNP, LSE: SNP) jointly announced that they would jointly acquire all tradable shares issued by China Gas for HKD 16.7 billion at most.

The next day, however, China Gas showed the attitude that it was not satisfied with the offer, which stood at about HKD 3.50 apiece. ENN Energy and Sinopec were not invited before they made the joint offer and their offer failed to signal the basic value of China gas, added the target company.

Now all the offers of the new comers have almost been not lower than HKD 3.50 per share. On January 3, China gas shares closed at up to HKD 3.63 apiece.

Hong Kong media predicted that more companies and organizations had joined the battle with the hope of driving up prices of China Gas shares and force ENN Energy and Sinopec to raise their offer.

No news has been heard about whether ENN Energy and Sinopec will offer more for the target shares or not. Sinopec, possessing approximately 4.8 percent of China Gas, has not moved further yet, according to the Stock Exchange of Hong Kong (SEHK).

The previous announcement of the two potential buyers showed that privately-run ENN Energy would be responsible for 55 percent of the spending and that state-owned Sinopec would shoulder the remaining.

The acquisition needs the permission of China's Ministry of Commerce (MOC), shareholders' meetings of related companies, the National Development and Reform Commission (NDRC), and so on.

In addition, SK Group is reported to long for the controlling right of China Gas. According to the Hong Kong gas company's interim financial report for 2010, ended November 30, 2010, Chey Taewon, chairman of the South Korean group, had indirectly held 424.2 million shares in China Gas, marking a stake of 9.68 percent.

In recent years, China Gas has been working on the expansion of its turf. In January 2010, it announced a conditional voluntary general offer to Zhongyu Gas Holdings Limited.

The deal, involving all the issued shares and all the outstanding convertible bonds of Zhongyu Gas, was to be done by Macquarie Capital Securities Limited, on behalf of Rich Legend International Limited, a wholly-owned subsidiary of China Gas. It might be worth HKD 2.117 billion, in accordance with the preliminary computation, said previous reports.

(menafn.com, Edited by Topco)