Sinopec to buy Canadian firm

By Richard Fu  |   2009-6-25  |     NEWSPAPER EDITION

SINOPEC Group has agreed to buy Canadian-listed Addax Petroleum Corp for C$8.3 billion (US$7.2 billion) in a deal which would become China's largest single overseas oil acquisition.

The takeover would give Sinopec oil reserves from west Africa to Iraq.

Sinopec agreed to make an offer to buy all of Addax Petroleum shares for C$52.80 apiece, the companies said in yesterday's announcement.

The offer price represents a 47-percent premium to Addax's closing price on June 5, the day before Addax said it was in talks with potential suitors.

"We believe the offer price is fair given prevailing oil prices and the project risks, and could be attractive if oil prices advance above the forecast assumptions," said Mirae Asset Securities analyst Gordon Kwan.

Sinopec said the purchase is a "transformational transaction" which will help it accelerate international growth and optimize its offshore oil and gas asset portfolio.