When is reform of a Chinese state-owned enterprise not reform at all?
When it’s not going to create value.
Arguably, for example — when it’s really a reverse merger that allows a parent to tap international capital markets and bail out a struggling subsidiary that lost heavy in Australian iron ore mines. Arguably, we said.
Or — an oil major selling a third of its enormous marketing segment to state-backed pension funds, in order to access private capital and boost its already dominant position. Again, arguably. Read more
Hardly anyone, it seems, believes that China’s shale gas efforts are going to hit paydirt any time soon.
Reuters wrote yesterday that the shale gas revolution risks ‘running further off track’ — and this is before it has even begun to produce any significant volumes. Read more
China’s Sinopec is eyeing a €2.7bn stake in Spain’s Repsol as Sacyr Vallehermoso, the indebted Spanish builder, races to offload half of its shares in the oil company to pay back loans in order to avoid a possible collapse, the FT reports, citing people familiar with the talks. Sacyr is scrambling to refinance a loan expiring on Wednesday that was taken out at the height of the credit bubble to buy 20 per cent of Repsol. The building group has identified two possible buyers for a quick sale of up to half its holding worth €2.7bn at current market prices. Sinopec, the state-controlled oil group that last year struck a $7.1bn deal to buy 40 per cent of Repsol’s Brazilian operations, has been approached by Sacyr’s advisers to purchase up to 10 per cent of the Spanish oil group’s shares. Sacyr also remains confident that an unnamed Latin American oil group is also interested and could bid before Wednesday.
China Gas has rebuffed a HK$15.3bn($2bn) offer from Sinopec and ENN Energy, reports Bloomberg, saying the bid was “opportunistic and fails to reflect the fundamental value of the company”. The Hong Kong-based company that pipes gas to the mainland has hired Macquarie to advise on its defence. China Gas closed on Wednesday at HK$3.38, 12 cents below the HK$3.50 offer from Sinopec and ENN. The rejection may open the way for a rival seeking access to rising demand from China Gas’s 6.6m residential customers and 41,981 industrial and commercial users in the world’s biggest energy user. The bid was made at a 25 per cent premium to China Gas’s previous close.
China Gas says it has received an all-cash offer from Sinopec and ENN Energy to buy a controlling stake, the WSJ reports. The deal may value the Hong Kong-listed gas distributor at about $2bn, based on a 25 per cent premium, the newspaper says, citing a person familiar with the matter who said Sinopec and ENN were expected to offer a 25 to 30 per cent premium. China Gas said its shares were suspended on the Hong Kong stock exchange with effect from December 7 after the consortium sent the first letter about the unsolicited offer. China Gas’s shareholders include the Asian Development Bank, the Oman Oil Company and Indian gas company GAIL, according to its website.
Sinopec, China’s biggest oil refiner by amount of oil refined, has signed a $5.2bn deal that will give it a 30 per cent stake in the Brazilian assets of Galp Energia, the FT says. The state-owned company will pay $3.5bn for the stake, in addition to $1.6bn of capital expenditure. The deal is Sinopec’s latest move into Brazil since buying a stake in Repsol for $7bn last year, Reuters reports. Chinese investment will help Galp to push further into developing Brazil’s vast and mostly untapped “subsalt” offshore oil reserves.
Sinopec agreed to pay $3.54bn for a 30 per cent stake in Galp Energia’s Brazilian unit, reports Bloomberg, in China’s largest overseas energy acquisition this year. China’s biggest refiner will subscribe for new shares to be issued by Galp and assume shareholder loans, the Beijing-based company said. Galp, which has a share in the western hemisphere’s biggest oil discovery since 1976, said this year it would seek to raise €2bn ($2.7bn) through the sale of part of its Brazilian unit. Sinopec said the transaction, which requires approval from the Chinese government, would allow the state-owned group to obtain 21,300 barrels of oil equivalent a day of equity output in 2015, climbing to a peak of 112,500 barrels oil equivalent a day in 2024, the WSJ says.
China Petrochemical Corp is in talks to buy a stake in the Brazilian unit of Portugal’s biggest oil company, Galp Energia, Bloomberg reports, citing people with knowledge of the matter. Galp, Portugal’s biggest oil company, is negotiating with Sinopec, Asia’s biggest refiner, and at least one other party ahead of a deadline for final bids this month, one of the sources told the news agency. Galp earlier this year said it would seek to raise €2bn through the sale of part of its Brazilian unit. Sinopec is also interested in Marathon Oil’s Angolan operations, the report says.
Sinopec has offered C$2.2bn (US$2.1bn) to buy Canadian oil and gas firm Daylight Energy, the latest in a series of acquisitions by Chinese oil companies hungry for assets in North America, the FT reports. China is the world’s second-biggest crude oil consumer after the US, and China’s state-owned oil and gas companies are among the world’s most active in global oil deals. Sinopec is offering C$10.08 per share for Daylight, a junior oil and gas exploration company with large acreage in Western Canada that is only partially developed. The offer price is more than twice Friday’s closing level for shares in the Toronto-listed company, and represents a 44 per cent premium to the 60-day trade weighted average share price. Daylight’s board said they supported the deal, which must still be approved by shareholders and regulators.
Canadian oil and gas explorer Daylight Energy has agreed to be acquired by China’s Sinopec for about C$2.2bn. Reuters reports the deal for Calgary, Alberta-based Daylight is for C$10.08 per share, more than double the closing price of Daylight’s closing price of C$4.59 on Friday, but the company noted it is only a 43.6 per cent premium over the 60-day weighted average trading price. SIPC is a subsidiary of China Petrochemical Corp and undertakes overseas investments and operations in the upstream oil and gas sector, Daylight said in its release announcing the deal. The transaction would mark the latest energy sector deal between China and Canada. It could also be large enough to face review under the Investment Canada Act, which must determine if foreign purchases of domestic firms are of net benefit to Canada. Just under a year ago the government vetoed BHP Billiton’s $38bn offer for Potash, the second such veto under the legislation. But the energy sector is considered less concentrated than the strategic Potash sector, and previous foreign takeovers of domestic energy firms have gone ahead. Sinopec already owns a stake in the huge Syncrude Canada oilsands venture and in July, China’s biggest offshore oil producer, CNOOC, bought Opti Canada for $34m and $2bn in debt.
China’s oil and gas companies are set to continue their global mergers and acquisitions drive this year after the country’s top three groups reported strong profits for 2010 and outlined future acquisition plans, reports the FT. PetroChina and Sinopec plan to spend a combined $36bn on exploration and production investments this year. Cnooc, which spent $9.9bn last year on oil and gas investments, said that its expenditure would “continue to rise”.
Chevron is selling an 18 per cent stake in its Indonesian deepwater gasfields to Sinopec for $680m, reports the FT. The Chinese oil & gas behemoth will now join the US firm within the $6bn project, marking another sign of Chinese interest in diversifying from coal and foreign oil into natural gas, the WSJ adds. Sinopec has already signed deals with Petrobras of Brazil, Statoil of Norway and Angola’s Sonagol in 2010, adds Reuters. Chevron’s Gorgon fields in Australia will also come under intense interest for their ability to support the long-term energy needs of China, India, South Korea and Japan, the FT notes.
China Petrochemical Corp, or Sinopec, is paying a 76% premium for its stake in the Brazilian unit of Spanish group Repsol, as the world’s biggest energy user switches its hunt for oil reserves to Latin America from Africa, reports Bloomberg. Sinopec agreed on Oct 1 to pay $7.1bn for a 40% stake in Repsol’s unit, which has reserves in the same area as the biggest oil discovery in the Americas this century. That amounts to $15 a barrel compared with the $8.50 Petroleo Brasileiro paid last month for assets in Brazil, said an analyst at Sanford C Bernstein & Co.
European stocks were starting the new quarter on the front foot, tracking Asian bourses, after an upbeat survey of China’s manufacturing sector eased concerns the world’s second-biggest economy was struggling to emerge from its mid-year sticky patch, reports the FT. The FTSE All-World index was higher by 0.3 per cent, adding to last quarter’s 14 per cent advance, as many stock investors remained optimistic about the prospects for global growth, or that central banks remained poised to provide support if required. News of an $18bn joint venture between Chinese refining major Sinopec and Spain’s energy giant Repsol, added to the positive mood, with traders reasoning the tie-up was indicative of the strong demand for resource assets and another example of a developing M&A trend as financial markets recover and corporate animal spirits return.
Breaking pre-market news on Friday,
- Repsol agrees to sell $7.1bn stake of Brazil unit to Sinopec – Bloomberg. Read more
Brazilian billionaire Eike Batista on Monday confirmed that Chinese state-controlled groups CNOOC and Sinopec are among bidders for assets in his OGX oil and gas group, reports Bloomberg. Batista said that all major oil companies were among potential buyers. People close to the matter said that Sinopec and Cnooc may offer at least $7bn for oil assets and a stake in OGX, although Batista said that amount would only buy a “tiny” stake. OGX shares rose 2% to 20.49 reais in Brazil’s afternoon trading. BreakingViews says that while OGX is essentially a start-up, it’s a bargain compared to buying into Petrobras as a way into Brazil’s “hot oil sector”.
China’s Sinopec is paying ConocoPhillips $4.65bn for its 9 per cent stake in oil-sands producer Syncrude Canada. The price is higher than many analysts had expected, Bloomberg says.
Sinopec, the Chinese oil and gas group, said on Monday it was in talks with BP over potential collaboration in the exploration and development of shale gas. The move underlines growing international interest in China’s shale gas fields. The talks follow agreement last November between Royal Dutch Shell and state-owned PetroChina on a joint development project for shale gas resources in Sichuan.
Tiaa-Cref has become the first large US asset manager to sell stakes in four Asian oil groups over concerns about human rights abuses in Sudan, in a move that will increase pressure on other investors to cut ties with those companies. Tiaa-Cref said on Monday it had divested holdings in Chinese state-controlled oil companies Petrochina, CNPC Hong Kong and Sinopec, and India’s Oil and Natural Gas Corporation.
Oil companies from emerging economies are responsible for more than half the sector’s biggest mergers and acquisitions by value this year, according to a PwC report. Emerging economy buyers, led by Chinese and Russian companies, paid for $24.2bn of the total $48bn value of the 50 largest oil and gas deals agreed in the second quarter, compared with just one-fifth of the total value of deals last year. The leading buyers in the second quarter were state-controlled groups Sinopec of China, which agreed to pay $8.8bn including debt for London-listed Addax Petroleum, and Gazprom of Russia, which spent $8.3bn on a number of deals, including $4.1bn to buy a 20 per cent stake in oil subsidiary Gazprom Neft.
China highlighted its ambitions to expand in the resources sector on Thursday when state-owned Sinopec – one of China’s largest oil companies – agreed to a C$8.3bn ($7.2bn) takeover of Addax, a Swiss-based oil company listed in Toronto and London with interests in Africa and Iraqi Kurdistan. The deal would mark China’s largest ever outbound investment in the oil and gas sector, according to Dealogic. Sinopec will pay C$52.80 per share to acquire Addax, a 16% premium to its closing price on Tuesday and an almost 50% premium to the price before it announced the talks.
China’s resources drive continues apace, despite the resounding failure of Chinalco’s bid to acquire a big stake in Rio Tinto. According to weekend reports – initially in the Sunday Times – Chinese state-owned oil group Sinopec is stepping up its race to secure access to global oil reserves with an “audacious” £4.8bn bid for Addax Petroleum, a London-listed group with fields in Iraqi Kurdistan and Nigeria.
Bloomberg reports on Monday that a spokesman for the Hong Kong-listed unit of China Petrochemical Corp, Sinopec’s official name, denied the unit has bid for Addax, though did not rule out the possibility that its state-owned (and unlisted) parent company has made a bid. Needless to say, the Beijing-based parent company has not taken any steps to clarify its position – and Addax isn’t talking either. Read more
Sinopec, the Chinese state oil group, has made an audacious £4.8bn bid for Addax Petroleum, a UK-listed group with fields in Iraqi Kurdistan and Nigeria, report the Times. Sinopec is understood to have tabled the indicative offer last week, trumping an earlier bid by the Korean National Oil Corporation. The FT adds that much is now up to Jean-Claude Gandur, president and CEO of Addax, who has a say in the votes of almost 40% of the shares.
Sinopec has made an approach to Imperial Energy, the UK-listed oil and gas explorer, which could scupper a £12.90 a share, £1.3bn ($2.6bn) approach from India’s ONGC. The Chinese state-owned oil group, also known as China Petroleum & Chemical Corp, approached Imperial last week and is now conducting due diligence on a formal offer. The move is the latest sign of China’s ambition to buy natural resource assets and, if successful, would be the largest takeover of a UK-listed group by a Chinese company. Imperial’s assets are mostly in Russia; Sinopec has sounded out the Russian authorities about the viability of making an offer. Imperial is expected to confirm it has received a second approach when London markets open Monday.