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Sinopec to acquire Canada's Addax in $7.2 billion dealExplore related topics
CHINA Addax Petroleum Corporation Story Quotes Comment Alert Email Print ShareBy Simon Kennedy, MarketWatch

LONDON (MarketWatch) -- Canadian oil and gas group Addax Petroleum said Wednesday that it's agreed to a C$8.3 billion ($7.2 billion) all-cash takeover bid from a division of China's Sinopec.

Addax /quotes/comstock/11t!axc (CA:AXC 45.65, +1.00, +2.24%) said it's entered a definitive agreement under which Sinopec will offer C$52.80 per common share in cash. The deal has been unanimously backed by the Canadian group's board.

The offer represents a 47% premium to the closing price on June 5, before Addax announced it was talks over a possible deal.

Addax shares closed Tuesday at C$45.65.

Formal documentation for the deal is expected to arrive in early July and shareholders will have at least 35 days to accept the offer. It will require acceptance from investors holding at least two-thirds of the stock as well as regulatory approval, including from the Chinese government.

If Addax backs out of the deal, or if Sinopec doesn't receive the necessary approval in China, then a break fee of C$300 million may be payable.

CEO Jean Claude Gandur and Addax & Oryx Group, which founded Addax Petroleum in 1994, have agreed to tender their shares in the offer and other senior directors will enter similar agreements.

The total lock-up agreements on shares represent around 38% of the stock.

"The efforts and accomplishments that Addax Petroleum has achieved thus far will be built on through increased investment in the business and acceleration of development and exploration plans," said Gandur in a statement.

RBC Capital Markets is acting as financial advisor to Addax and Fasken Martineau DuMoulin LLP is acting as legal counsel.

Simon Kennedy is the City correspondent for MarketWatch in London