China Gas shares climb as rival lifts stake

PUBLISHED : Tuesday, 08 May, 2012, 12:00am
UPDATED : Tuesday, 08 May, 2012, 12:00am


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Shares of piped gas distributor China Gas rose 4.1 per cent after state-owned rival Beijing Enterprises Group raised its stake at a substantial premium to the unsolicited takeover offer of the ENN Energy Holdings-China Petroleum & Chemical (Sinopec) consortium.

Beijing Enterprises Group's surprise move will raise pressure on the consortium to raise its HK$3.50 a share offer price, which is 14.6 per cent lower than Beijing Enterprises Group's purchase price of HK$4.10 for Oman Oil's 237.6 million China Gas shares, or a 5.4 per cent stake. China Gas yesterday closed at HK$4.06.

According to filings to the Securities and Futures Commission, Beijing Enterprises Group on Thursday bought 237.57 million China Gas shares at HK$4.10 each from Oman Oil.

Beijing Enterprises Group bought 161.8 million more shares at HK$4.10 yesterday, raising its stake to 12.65 per cent from 8.96 per cent.

No disclosure was made of the seller in this round. A person familiar with the matter said the seller was likely Oman Investment Fund, another entity controlled by the Oman government. Hong Kong Exchanges and Clearing data showed Oman Investment Fund as having owned 161.8 million China Gas shares.

China Gas joint managing director Eric Leung Wing-cheong said a fair price for a controlling stake in China Gas should be higher than the HK$4.10 paid by Beijing Enterprises Group.

China Gas has previously slammed ENN and Sinopec's offer as 'opportunistic' and failing to reflect its long-term value.

Analysts remain divided over the possibility of a bidding war for China Gas, which runs 151 exclusive piped-gas distribution projects on the mainland, compared to 100 projects by ENN.

But a research note by US brokerage Jefferies said Beijing Enterprises Group was driven either by a desire to help business partner PetroChina better compete in the downstream gas market, an interest to take over China Gas, or make a financial investment. Beijing Enterprises and PetroChina declined to comment.