ERHC Energy Inc (ERHE)

[Nightdaytrader]

Sinopec Group to Purchase Beijing Chemicals Company (Update2)

June 9 (Bloomberg) -- China Petrochemical Corp., Asia's biggest refiner, plans to pay 3.3 billion yuan ($412 million) for 83 percent of Beijing Eastern Petrochemical Co., the parent of Shenzhen-listed Beijing Huaer Co.

China Petrochemical's unit Sinopec Beijing Yanshan Chemical Corp. will buy the stake from shareholders China Cinda Asset Management Corp. and China Orient Asset Management Corp., Beijing Huaer said in a statement to the Shenzhen Stock Exchange today. The transaction needs government approval, it said.

China Petrochemical, parent of overseas-listed China Petroleum & Chemical Corp., has no ``specific plans'' to reorganize Beijing Huaer at this time, the company said. Beijing Huaer's net loss widened more than fivefold to 78.9 million yuan in the first quarter from a year earlier as sales dropped, according to its quarterly report.

``It makes sense for China Petrochemical to take over Beijing Huaer to integrate operations,'' said Huang Meilong, an analyst at Shenyin Wanguo Research and Consulting Co. in Shanghai. China Petrochemical's ethylene unit supplies the material to Beijing Huaer to make polyvinyl chloride and other chemical products, he said.

Beijing Huaer's shares rose as much as 10 percent to 6.49 yuan on the Shenzhen exchange. The shares changed hands 6.6 percent lower at 5.51 yuan as of 11:14 a.m. local time. They have doubled this year, while the Shenzhen Composite Index has gained 45 percent.