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a Clear Victory for Addax CEO

front page Globe and Mail http://www.theglobeandmail.com/report-on-business/


Sinopec agrees to buy Addax for $8-billion Offer of $52.50 a share marks clear victory for Addax CEO Jean Claude Gandur 7:27 AM EDT 0 2

China's biggest oil products company, Sinopec, has agreed to buy Toronto-listed Addax Petroleum Corp. (AXC-T45.651.002.24%) for $52.50 a share, valuing the company at more than $8-billion.

The price was somewhat higher than expected. Earlier this week, the shares were trading at about $45 a share as investors took the view that the company was fully valued. The offer represents a 47 per cent premium to the closing price on June 5, the day before Addax announced it was in discussions with potential buyers.

The offer represents a clear victory for Jean Claude Gandur, the Addax founder and CEO who controls about 38 per cent of the company personally and through his holding company, Addax & Oryx Group. Mr. Gandur, a French-born Swiss citizen who lives in Geneva, told brokers and analysts not long ago that he would resist an offer pitched at less than $50 a share.

Addax signed a definitive agreement with a Sinopec subsidiary called Sinopec International Petroleum Exploration and Production Corp. Mr. Gandur and his holding company entered a lock-up agreement to tender their stake to Sinopec.

Addax warned that Sinopec's commitment to buy all the outstanding shares “is subject to the receipt of certain approvals from the Government of the People's Republic of China.” Sinopec is government-controlled. In 2008, it ranked 16th on Fortune magazine's Global 500 list, measured by revenue. The Addax acquisition is the largest foreign takeover by a Chinese company.

Addax did not identify the other bidders, though the high price suggests the competition was strong. Sinopec was thought to be competing with Korean National Oil Co. and possibley two Indian companies, state-controlled Oil and Natural Gas Corp. and Reliance Industries Ltd.

Addax produces about 140,000 barrels a day, most from on- and offshore fields in West Africa. It also has some production from the Taq Taq field in the Kurdistan region of Northern Iraq.

Mr. Gandur predicted more than a year ago that Addax would eventually find an Asian buyer, because Asian oil companies have a greater tolerance for operations in politically risky countries.

In London trading after the announcement was made, Addax shares jumped more than 15 per cent to £27.40.

RBC Capital Markets acted as Addax's financial adviser on the deal.