China's Sinopec and ENN Energy Holdings disclosed plans Tuesday to acquire China Gas Holdings for $2.2 billion, amid the Asian powerhouse's surging demand for gas.
The state-run Sinopec and piped-gas distributor ENN Energy Holdings said in a joint statement they have offered HK$3.50 ($0.45) per China Gas share to buy the privately run natural gas distributor.
"The transaction is consistent with Sinopec Corp.'s overall business development strategy in (China) natural gas supply market," the two firms said in the statement to the Hong Kong stock exchange.
"Through this transaction, Sinopec Corp. hopes to rapidly expand its supply of natural gas to end users and in doing so, optimise its integrated business chain," the statement said.
The firms said the synergy between China Gas and ENN, which has 100 piped gas projects across China, will boost market penetration.
China Gas is said to be consulting its advisors on the offer, according to Dow Jones Newswires.
The news however failed to excite investors, with the Hong Kong-listed Sinopec shares closing down 0.37 percent to HK$8.03 while ENN fell 2.58 percent to HK$26.40. China Gas ended up 20.36 percent at HK$3.37.
The latest offer comes after Sinopec on Monday raised its stake in a major Australian-US liquefied natural gas project, and said in November it will pay $3.54 billion for a 30 percent stake in the Brazilian unit of Portuguese oil giant Galp Energia, as Beijing scrambles to secure energy supplies.
Chinese demand for gas is forecast to jump 5.9 percent every year until 2035, compared with OECD growth of 0.5 percent, taking the Asian giant's share of global gas consumption from 2.7 percent in 2008 to 8.7 percent by 2035.
