Gas distributor China Gas Holdings is taking over London-listed Fortune Oil's gas business in China for US$400m. China Gas will pay Fortune $340m for its 85% stake in the gas assets, and pay $60m for the remaining 15% held by Singapore-listed Wilmar International.
The acquired business includes a coal bed methane block in China's Shanxi province and city-gas distribution networks in 10 cities and provinces. As part of the agreement, China Gas will pay $200m upfront in cash with the remaining $200m payable including 6% interest in cash or China Gas shares in a year's time.
Tee Kiam Poon, Chief Executive of Fortune Oil said: "This transaction allows Fortune Oil to create one of the largest natural gas operators in China and together further develop the China natural gas business underpinning the Chinese government commitment to growing significantly China's natural gas consumption."
Apart from natural gas projects, the acquired business is also involved in compressed natural gas (CNG) and liquefied natural gas (LNG) vehicles and the vessel refueling business. Fortune Oil is guaranteeing earnings of the businesses being sold to be not less than HK$200m in 2013 and HK$400m in 2014.