Wednesday, October 17, 2012

Going cheap did not help Sinopec - Wei Gu

Wei Gu
Sinopec's bid to purchase China Gas for US$2.2 billion failed because the state-owned giant offered too little for the private company. Its low bid did not help, writes Reuters' columnist Wei Gu about the deal in BreakingViews.

Wei Gu:
The Chinese oil producer had to drop its $2.2 billion offer after failing to secure regulatory approval to buy the gas company. As a state-owned bidder, the political sensitivities were too great, and the price probably too low. Yet China’s fragmented gas industry still needs to consolidate. 
Launching a hostile bid alongside ENN Energy in December was an opportunistic move. China Gas’ shares were halved in ten months, after co-founder Liu Minghui quit, dogged by embezzlement allegations from which he was subsequently cleared. Investors expected a better price. Even after Sinopec’s offer failed, China Gas’s shares closed 18 percent above the offer price on Oct. 16.
More in Reuters' BreakingViews.

Wei Gu is a speaker at the China Speakers Bureau. Do you need her at your meeting or conference? Do get in touch or fill in our speakers' request form.

The China Weekly Hangout offers each Thursday a debate on China’s current affairs. Today the focus will be on innovation in China. October 18 we will discuss the question what China’s telecom giant Huawei could have done in defending itself against the attacks by US Congress. For upcoming debate, sign up at our China Weekly Hangout page.
Enhanced by Zemanta
Post a Comment