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| Sinopec group agrees to buy Addax for $7.3 bn |
| Bloomberg / Jun 25, 2009, 00:51 IST |
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China Petrochemical Corp, the country’s second-biggest oil company, agreed to buy Swiss explorer Addax Petroleum Corp for $7.3 billion in cash to tap oil reserves in Iraq’s Kurdish region and Africa.
Sinopec Group, as China Petrochemical is known, offered $46.8 a share in cash, Geneva-based Addax said in a statement on Wednesday. That’s 47 per cent more than Addax’s closing market price in Toronto on June 5, the day before the company said it was in takeover talks.
China, which relies on imports for about half of its crude- oil needs, is seeking to increase investment in overseas petroleum fields as oil’s plunge of more than 50 per cent from a July record makes it cheaper to acquire overseas energy assets. Addax has operations in West Africa and holds exploration licenses in Iraq’s Kurdistan, which has begun exporting oil.
The acquisition “fits well with the nation’s global energy strategy as the country pushes for diversification of its oil supplies, and increased access to oil in the Middle East and Africa will in no doubt boost its energy security,” said Jiang Xinmin, an energy researcher at the National Development and Reform Commission, China’s top economic planner.
The transaction is the second this month involving assets in Iraq’s Kurdish territory after the region started exports at the beginning of June. Heritage Oil Ltd. agreed to buy Turkey’s Genel Energy International Ltd for £1.52 billion in stock on June 9, creating the biggest producer in that area.
Addax Petroleum rose as much as 372 pence, or 16 per cent, to 2,740 pence in London following the announcement.
Addax has started exports from the Taq Taq license area in Kurdistan, the producer said on June 1. The crude is being sent by truck to the Khurmala station, then transported by pipeline to the Turkish Mediterranean port of Ceyhan. Exports from DNO International ASA’s Tawke field, another project in the autonomous region, have also commenced.
Production capacity at Taq Taq is about 40,000 barrels a day, and Addax is expanding the facilities to pump as much 70,000 barrels a day.
The company and its partner Genel Energy International Ltd. expect peak production of 180,000 barrels a day and aim to build a pipeline from the field to the export link, it said.
Executives from Sinopec Group were in London to meet with Addax to discuss a potential takeover bid, Dow Jones Newswires reported on June 17, citing two unnamed people familiar with the matter.
China National Petroleum Corp. and China National Offshore Oil Corp are also interested in a deal with Addax, the Hong Kong-based, English-language newspaper South China Morning Post reported on June 8, quoting unidentified people.
Addax said on June 9 that preliminary talks were under way with third parties expressing an interest in a “potential transaction” with the company. It didn’t elaborate.
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