One of China’s big gas distributors makes an unsolicited bid for a rival, assisted by the country’s largest oil and gas group. Seven months later, the takeover offer’s preconditions have not been met. That is how hostile takeovers involving state-owned enterprises work in China.
Sinopec and ENN Energy launched a HK$3.50-a-share offer for 50.1 per cent of China Gas in December. On Friday, ENN’s shareholders approved the offer. Yet it still has no nod from the ministry of commerce, which is reviewing the takeover on antitrust grounds. The regulator has instead extended the review up to another 60 days. And the target has still not agreed to give the bidders access in order to conduct due diligence.
The offer, valuing China Gas at about $2bn, is small for Sinopec. But it wants access to China’s gas distribution networks to complement upstream supply. Buying a slice of China Gas would give Sinopec eyes (read: influence) on China’s gas price reform process. PetroChina already has distribution access through its controlling stake in Kunlun Energy.