Chinese companies Sinopec and ENN Energy Holdings said late Monday that they will extend their joint offer for gas distributor China Gas Holdings by a month to September 6 in order to get government approval for the deal.
The companies are staging a hostile bid for China Gas with an all-cash offer of HK$3.50/share, made in December last year and valuing the company at HK$16.7 billion ($2.2 billion). ENN has a 55% stake in the consortium, while state-owned Sinopec holds 45%.
China Gas has rejected the offer as too low and said the majority of its shareholders are against the acquisition as its shares have consistently traded higher than HK$3.50 for much of this year. The company's share price closed at HK$4.26 on Monday.
Sinopec and ENN said Monday they have set a new long-stop date -- also known as the deadline for pre-conditions set out in the indicative offer to be met, including government approval -- at September 6, the fourth extension so far. It had previously been extended in March, April and July.
The two companies said they have submitted applications to China's National Development and Reform Commission, the Ministry of Commerce and the State-owned Assets Supervision and Administration Commission, but have not yet received any approval.
The acquisition of China Gas would boost ENN's market share in the country's natural gas distribution sector. It would also strengthen Sinopec's midstream gas business, complementing its growing gas production in central China.
