Sinopec swoops to buy Addax
BARRY MORGAN and XU YIHE, London and Singapore
Chinese giant in $7.2bn takeover of player with assets in West Africa
Chinese energy giant Sinopec has agreed a $7.2 billion deal to buy Swiss-headquartered Addax Petroleum after months of industry speculation.
Listed in both London and Toronto, Addax this week announced it had entered into a ?”definitive agreement”with Sinopec International Petroleum E&P Corporation (SIPC) under which the Chinese giant has offered to acquire all outstanding equity of Addax through a negotiated takeover for C$52.80 per share.
Addax said its board was recommending the proposed deal.
SIPC, a wholly-owned subsidiary of Sinopec, has offered to pay what represents a 47% premium to the closing market price on the Toronto Stock Exchange on ?5 June 2009, the day before Addax's public announcement that it was in preliminary talks.
Although the agreementwas seen by many as likely to be a done deal, there were some suggestions that Sinopec's chief rival in the race for Addax, Korea National Oil Corporation (KNOC), might yet consider a counter bid.
Sources familiar with the matter said KNOC chief executive Kang Yong-won and vice president Seong-Hoon Kim left Seoul on Tuesday for Geneva, trying to renegotiate with Addax. However, while a Sinopec source said he doubted any KNOC counter offer would succeed, he acknowledged that anything can still happen before a transaction is completed. The Sinopec agreement provides for a termination or break-up fee of $300 million if the acquisition is not completed within“certain specified circumstances”. The deal is subject to approval by the government of China which must agree the deal by 24 August.
Lock-up agreements for Addax chief executive and president Jean-Claude Gandur and his senior officers and directors represent 38% of outstanding Addax shares.
RBC Capital Markets will act as financial advisor and Fasken Martineau DuMoulin will act as Addax's legal counsel with Osler, Hoskin&Harcourt acting as legal counsel to the board.
With assets in Nigeria, Cameroon and Gabon, Addax is one of the region's largest independent oil producers, having increased crude output to an average of 134,700 barrels per day in the first quarter of 2009 mainly offshore Nigeria.
It had 538 million barrels of proven and probable oil reserves as of the end of last year.
In West Africa, Addax and Sinopec are due to spud the first of several deep-water wildcats next month in the Gulf of Guinea in the Nigeria-Sao Tome Joint Development Zone.
Addax also has a significant position in Iraqi Kurdistan through its interest in the Taq Taq field, which has just started to export oil.
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Thursday, 25 June, 2009, 23:01 GMT | last updated: Thursday, 25 June, 2009, 23:01 GMT
