Oil producer to pay Zhenhai Refining investors a 12.2pc premium with a proposed price of $10.60 per share
Sinopec Corp, the mainland's second-largest oil producer, is proposing to pay $7.67 billion to privatise its refining unit, Sinopec Zhenhai Refining & Chemical.
Investors are being offered $10.60 per share, a premium of 12.2 per cent on the stock's November 2 closing price of $9.45.
Trading in the company's shares has been suspended since then, pending details of the privatisation.
The deal is to be financed by existing bank facilities of Sinopec granted by Industrial and Commercial Bank of China and the Bank of China.
It will involve another subsidiary, Ningbo Yonglian, first entering into a merger agreement with Zhenhai Refining. Ningbo Yonglian will then offer to buy the remaining shares it does not own in the refinery arm.
Sinopec holds about 71.3 per cent of Zhenhai Refining's shares. Another 28.7 per cent of the stock is in public hands, and global energy giant BP holds 9.41 per cent. BP is a fuel distribution joint venture partner of Zhenhai Refining.
