Beijing Enterprises Holdings Ltd. (392) said it will pay HK$8.22 billion ($1.1 billion) to its state-owned parent for a stake in China Gas Holdings Ltd. (384), a supplier of natural gas to 184 Chinese cities.
The company will pay HK$7.80 a share to Beijing Enterprises Group for 22.01 percent of China Gas, Hong Kong-based Beijing Enterprises Holdings said today in a statement. That’s 12 percent less than yesterday’s closing price of China Gas.
Following the transaction Beijing Enterprises Holdings will be the biggest shareholder in China Gas, according to data compiled by Bloomberg. The parent increased its stake in China Gas last year after China Petroleum & Chemical Corp. (386) and ENN Energy Holdings Ltd. (2688) made a takeover offer for China Gas.
“With this investment in China Gas, the company expects to strengthen its market position in the China natural gas industry,” Beijing Enterprises Holdings said in the statement. “The company and China Gas can mutually benefit from the synergies created by their collaboration.”
Beijing Enterprises Holdings dropped 4 percent to HK$53.10 as of 2:08 p.m. in Hong Kong trading, while the benchmark Hang Seng Index gained 0.3 percent. China Gas rose 0.2 percent to HK$8.85.
Beijing Enterprises Holdings will pay its parent HK$2 billion in cash and issue 113 million new shares at HK$55 a piece, it said. Morgan Stanley is advising Beijing Enterprises Holdings.
The purchase needs approval from the company’s independent shareholders, Beijing Enterprises Holdings said. The parent, which holds about 58 percent, will abstain from voting.
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