Sinopec Group Agrees to Buy Addax for $7.3 Billion

Discussion in 'Wall St. News' started by ASusilovic, Jun 24, 2009.

  1. June 24 (Bloomberg) -- China Petrochemical Corp., the country’s second-biggest oil company, agreed to buy Swiss explorer Addax Petroleum Corp. for C$8.3 billion ($7.3 billion) in cash to tap oil reserves in Iraq’s Kurdish region and Africa.

    Sinopec Group, as China Petrochemical is known, offered C$52.80 a share in cash, Geneva-based Addax said in a statement today. That’s 47 percent more than Addax’s closing market price in Toronto on June 5, the day before the company said it was in takeover talks.

    China, which relies on imports for about half of its crude- oil needs, is seeking to increase investment in overseas petroleum fields as oil’s plunge of more than 50 percent from a July record makes it cheaper to acquire overseas energy assets. Addax has operations in West Africa and holds exploration licenses in Iraq’s Kurdistan, which has begun exporting oil.

    The acquisition “fits well with the nation’s global energy strategy as the country pushes for diversification of its oil supplies, and increased access to oil in the Middle East and Africa will in no doubt boost its energy security,” said Jiang Xinmin, an energy researcher at the National Development and Reform Commission, China’s top economic planner.

    Addax has started exports from the Taq Taq license area in Kurdistan, the producer said on June 1. The crude is being sent by truck to the Khurmala station, then transported by pipeline to the Turkish Mediterranean port of Ceyhan. Exports from DNO International ASA’s Tawke field, another project in the autonomous region, have also commenced.

    While the US is creating fiat money, the Chinese are buying real assets