Taking advantage of the economic downturn, Sinochem Group (Sinochem), China's fourth largest petrochemical corporation, is to buy Emerald Energy Plc in a cash deal worth US$875 million.
UK-based Emerald Energy Plc (Emerald) is traded on the London Stock Exchange and included in the FTSE 250 Index. The company owns oil and gas resources located mainly in Columbia and Syria. Its major shareholders include JPMorgan, Standard Life and Legal & General. According to Sinochem, Emerald's management has agreed to the takeover.
Sinochem said Emerald shareholders will receive 750 pence per share, an 11 percent premium based on Emerald's closing price of 675 pence. The total value of Emerald's shares is estimated to be £532.1 million.
In its announcement, Sinochem said the deal was supported by Emerald's two principal shareholders - Waterford Finance and Investment controlled by Russian investor Michael Kroupeev, and Soyuzneftegaz - who jointly controlled 39 percent of Emerald's shares.
Sinochem said the acquisition represents a major step forward in its bid to acquire upstream resources.
"Domestic oil and gas fields have basically all been pocketed by the three national oil giants, little is left for Sinochem," a Sinochem insider said. "But good opportunities still exist outside the country. Overseas procurements represent a key link in the company's strategic plan to integrate upstream resources with the downstream market."
Currently, Sinochem has 14 oil and gas fields at home and abroad, with estimated reserves of 1.41 million tons, or 120 million barrels.
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(China.org.cn by Maverick Chen, August 14, 2009)