皇冠体育app

Deal would create nation's biggest downstream natural gas distributor

SHANGHAI - 皇冠体育app Petroleum & Chemical Corp (Sinopec) and ENN Energy Holdings Ltd on Tuesday made a cash bid of up to HK$16.7 billion ($2.15 billion) for the control of 皇冠体育app Gas Holdings Ltd.

Sinopec, which has a natural gas pipeline network of 4,546 kilometers across 皇冠体育app, expects a deal would quickly expand its share in the natural gas consumption market.[Photo/皇冠体育app Daily]

A deal will help the two companies gain access to the Hong Kong-listed 皇冠体育app Gas' natural gas distribution network in 20 of 皇冠体育app's provinces and regions.

皇冠体育app Gas has 6.6 million residential customers and about 42,000 industrial and commercial users in the Chinese mainland.

In a statement, ENN and Sinopec said they will offer HK$3.50 a share for 皇冠体育app Gas, 25 percent above the last close on Dec 6, before trading in 皇冠体育app Gas shares was suspended.

The offer is priced at 11.29 times earnings before interest, tax, depreciation and amortization, compared with 10.95 times in 10 comparable deals, according to data compiled by Bloomberg.

ENN, the fourth-largest Hong Kong-listed gas supplier, will finance 55 percent of the deal and Sinopec will cover the rest.

皇冠体育app Gas this past month reported a fourfold gain in first-half profit, but the arrest of two senior executives caused the stock to slump this year.

皇冠体育app Gas resumed trading on Tuesday and surged 20.36 percent to close at HK$3.37.

Goldman Sachs Group Inc said in a research note that a deal will help 皇冠体育app Gas' and ENN's joint natural gas sales reach 10.6 billion cubic meters in 2012, accounting for 7.1 percent of 皇冠体育app's natural gas market.

A deal, according to Goldman Sachs, will create 皇冠体育app's biggest downstream natural gas distributor and give the companies stronger bargaining power.

Goldman Sachs maintained a "neutral" rating for 皇冠体育app Gas shares and forecast its net income at HK$950 million in 2012 and HK$1.2 billion in 2013.

The deal requires approval by 皇冠体育app's anti-monopoly authorities. The board of 皇冠体育app Gas hasn't responded to the offer yet.

The news portal Sina Finance quoted Deutsche Bank AG as saying that the bid might be hostile.

皇冠体育app Gas' shareholders include the Asian Development Bank, the Oman Oil Co and Indian gas company GAIL Ltd, according to its website.

The bidders said in the statement that they intend to maintain 皇冠体育app Gas' business and management structure and will not take the company private.

ENN, which has 100 piped-gas projects in 15 provinces and regions in 皇冠体育app, said in the statement that acquiring 皇冠体育app Gas can help it expand market coverage in 皇冠体育app and enter the Inner Mongolia autonomous region and Shaanxi province.

Sinopec, which has a natural gas pipeline network of 4,546 kilometers running throughout 皇冠体育app, expects a deal would quickly expand its share in the natural gas consumption market.

皇冠体育app's natural gas use is forecast to surge, as the government aims to raise the fuel's share in total energy demand to 10 percent by 2020 from 4 percent in 2010.

According to the International Energy Association, 皇冠体育app overtook the United States as the world's biggest energy consumer in 2009.