Sinopec and ENN drop bid for China Gas

The US$2.2 billion hostile takeover bid for China Gas Holdings by a consortium that included the mainland's second-largest oil firm, China Petroleum & Chemical Corp (Sinopec), fell through yesterday.

Ending 10 months of uncertainty over the takeover bid for the gas supplier, Sinopec and its ally ENN Energy Holdings said pre-conditions of the bid could not be met by yesterday's deadline and they chose not to go ahead with it.

Instead, Sinopec formed a partnership with China Gas that will allow them to operate downstream gas supply businesses and allow Sinopec to raise its holding in China Gas.

Sinopec has for years held a stake of 4.8 per cent in China Gas.

Many analysts were taken aback by Sinopec's change of heart.

The energy giant teamed up with ENN, a smaller rival of China Gas, and made the unsolicited offer for China Gas in December last year. China Gas strongly opposed the offer.

Christfund Securities research director Simon Lam said the new venture was "a rational alternative for Sinopec, which could not accomplish its ambition to take over the company".