Imperial surges as India and China launch rival bids
China and India are going head to head in a bidding war to take over British oil and gas firm Imperial Energy, sending its shares shooting up by 8 per cent yesterday.
China Petroleum and Chemical Corporation, the state-owned oil company commonly known as Sinopec, has approached Imperial with an offer in the region of £13-£14 a share, valuing it at around £1.3bn-£1.4bn, a source close to the deal told City PM
Its offer trumps one made by India’s state-owned Oil and Natural Gas (ONGC) last month, which was worth £12.90 a share or £1.3bn. Despite Sinopec’s higher offer, the Indian firm is still in the running, and may up its price, the source said.
If Sinopec’s bid is successful, it would be the biggest ever takeover of a firm listed on the London stock exchange by a Chinese company.
It will also be the first time that state-owned companies from India and China have fought to gain control of a publicly quoted British asset.
Imperial’s oil exploration is focused in Siberia, making it a politically sensitive bid, but Sinopec is understood to have sought the permission of the Russian authorities before making its move.
Imperial yesterday confirmed it had been approached in relation to a possible cash offer for the company, but refused to name the bidder.
Analyst Views: Is this a good deal for Sinopec?
Tim Heeley (Daniel Stewart & Company): “I think it would be a good deal for Sinopec – if it is them, we still don’t know that for sure. Both Sinopec and the Indian ONGC, the other possible bidder, are from two energy-hungry countries, with deep pockets, a long-term view and both are ready to take a risk on board. But I have to say that I still have a feeling that ONGC will prevail. We’ll see where it goes.”
Mathew Bridle (researchoracle.com): “We believe the deal is an extension of the ‘negotiation mechanism’ between Russia and China, and if it materialises, it will help Sinopec start to secure access to Russian natural resources in an environment of increasing energy competition across Asia.”
Graeme Dickson (Lite Financial): “It is good news for Sinopec, if they get it at the right price. Anecdotally, the Russians appear to accept the Chinese as credible business partners while the former colony India might be deemed as too closely linked to the UK.”