Stake increase puts paid to hostile bid
State-owned Beijing Enterprises Group has further raised its stake in takeover target China Gas Holdings and become its largest shareholder.
The move dooms the takeover bid by a rival consortium formed by ENN Energy and China Petroleum & Chemical (Sinopec) to failure unless the bid price is significantly raised.
Beijing Enterprises Group, the parent of listed natural gas distributor and water treatment firm Beijing Enterprises, bought 132.41 million shares in the open market on Wednesday at HK$3.68 to HK$4 each, for a total of HK$518.88 million, according to a filing by Beijing Enterprises Group to the Hong Kong stock exchange. This raised its stake to 17.96 per cent from 14.94 per cent.
The average acquisition price works out at HK$3.92 per share, according to calculations by the South China Morning Post.
On Tuesday, an alliance between London-listed oil and gas supplier Fortune Oil and ousted China Gas managing director Liu Minghui raised their combined stake in China Gas to 17.67 per cent from 17.65 per cent at an average price of HK$3.69, based on data from a separate filing by the purchasers to the exchange.
SK E&S and SK Gas - units of South Korean conglomerate SK Group - together have 15.34 per cent.
Beijing Enterprises Group, the Fortune Oil-Liu alliance and SK Group have amassed a combined stake of 50.97 per cent after multiple share purchases in recent weeks.
Their purchase prices significantly exceeded the HK$3.50 per share hostile bid launched by the ENN-Sinopec consortium, which needs to gain a minimum 51 per cent stake to succeed.
This means Beijing Enterprises Group's latest stake increase has effectively foiled the ENN-Sinopec consortium's takeover bid, unless ENN and Sinopec raise their bid substantially.
By bidding for rival China Gas, ENN hopes to beef up its bargaining power against gas producers and reap savings from bigger operations, while Sinopec, the mainland's second-largest gas producer, wants to secure gas sales channels.
The intention of Beijing Enterprises Group is less clear, as it remains silent on the subject. Some analysts have speculated its stake increase in China Gas is supported by business partner PetroChina, Sinopec's rival and the nation's largest gas producer. PetroChina denies it.
So far, ENN and Sinopec have indicated they are reluctant to raise their bid price, although their bid would need a statement of no objection from the Ministry of Commerce on anti-monopoly issues and support from ENN's shareholders.
The consortium has until July 6 to obtain the ministry's blessing. ENN shareholders will vote on the bid the same day.
If it fails to get a positive result on both counts, the bid will collapse.
Jump in the net profit of China Gas for the 12 months to the end of March, as reported by the company yesterday.