China Gas Valuation Tempts Richer Takeover Bid: Real M&A

Investors are betting that a takeover offer for China Gas Holdings Ltd., already the most expensive in the pipeline and gas distribution industries since the 2006 buyout boom, will need to get even richer to succeed.

China Gas, a one-time fashion retailer that delivers gas in the world’s second-largest economy, is trading 10 percent above the HK$3.50 a share bid from ENN Energy Holdings Ltd. and China Petroleum & Chemical Corp., known as Sinopec. That’s the most for any deal of more than $100 million in Asia’s developed markets, according to data compiled by Bloomberg. Including net debt, the HK$25.5-billion ($3.3 billion) offer values Hong Kong-based China Gas at 11.3 times earnings, the highest since 2006 for a cash acquisition of a pipeline or gas distributor.