By The Associated Press
Wednesday, August 12, 2009
Sinopec has won Chinese government approval of its $7.5 billion takeover of Addax Petroleum, a deal aimed at securing added production capacity and coveted reserves in West Africa and the Middle East.
In a statement on its Web site, Addax said it had received confirmation of the expected approval from the National Development and Reform Commission from Sinopec, formally known as China Petroleum & Chemical Corp.
China's official Xinhua News Agency announced the approval Wednesday, citing Sinopec. It put the value of the deal at $7.5 billion.
The offer is still subject to approval by holders of two-thirds of Addax Petroleum shares, it said.
Sinopec's Shanghai-traded shares fell 5 percent Wednesday to 13.15 yuan amid a broad sell-off that took the benchmark Composite Index down nearly 5 percent.
The deal is the largest ever overseas takeover by a Chinese company, although it is only half the size of last year's acquisition by Aluminum Corp. of China, with Alcoa Corp., of a 12 percent stake in global miner Rio Tinto PLC. That deal was worth $14.3 billion.
State-owned Sinopec, China's largest refiner by capacity, has been seeking to boost crude oil production as a cushion against spikes in global crude oil prices that have caused it billions in losses in recent years due to caps on domestic fuel prices.
The biggest takeover before Sinopec's bid for Addax was offshore oil-services provider China Oilfield Services' acquisition last year of Norway's Awilco Offshore, in a deal valued at $2.5 billion,
Geneva-based Addax's oil and gas exploration and production is based mainly in west Africa and the Middle East, including joint operation of the Taq Taq field in Iraq's self-ruled Kurdish region with Turkey's Genel Enerji.
The company, which is listed on exchanges in London and Toronto, says Sinopec promised to keep Addax's top management intact.