China Gas to buy Fortune Oil's gas assets
City-gas distributor to pay US$400 million for gas resources of London-listed Fortune Oil, as consolidation in the sector continues
China Gas Holdings, one of the nation's largest city-gas distributors, has agreed to pay US$400 million for the gas assets of London-listed petroleum and gas distributor Fortune Oil, in the latest industry consolidation deal.
China Gas has agreed to pay Fortune US$340 million for its 85 per cent stake in the gas assets, and pay US$60 million for the remaining 15 per cent held by Singapore-listed edible oil and sugar producer Wilmar International.
The gas assets include city-gas distribution projects, gas pipelines, liquefied natural gas buses and vessels refuelling operations in northeast China and the Yangtze River, and a project to produce gas trapped between coal seams in Shanxi province.
"We believe there are synergistic benefits from combining the two companies - enlarging the natural gas operations to 200 cities [compared to 172 cities operated by China Gas alone], connecting upstream, mid-stream and downstream businesses," said Fortune Oil chief executive Tee Kiam Poon.
China Gas will pay US$200 million cash upfront for the assets, with the remaining US$200 million to be settled by the end of next year in cash. Fortune has an option to require China Gas to settle the second US$200 million payment by issuing up to 250 million China Gas shares.
The deal requires approval by the two firms' shareholders and Beijing's clearance after anti-monopoly vetting.