Sinochem targets Syria with $878m Emerald buy
London, August 12, 2009
China's state-run Sinochem Corp agreed a 532.1 million pound ($878.2 million) takeover of Emerald Energy to gain access to the UK-listed oil and gas explorer's operations in Syria and Colombia.
The deal is a major step for Sinochem, which has made about $1 billion of overseas energy acquisitions to date, and the latest deal by a state-backed Chinese firm eager to secure natural resources abroad.
The news sent Emerald shares soaring. It also represents a big payday for Emerald's biggest shareholder, oil financier Michael Kroupeev, whose Waterford Finance & Investment backed a 6.8 million pound rescue rights issue by Emerald in 2003.
Han Gensheng, a president of Sinochem, said on Wednesday the deal fitted its strategy of building a global energy group.
'Emerald's Syrian and Colombian assets have attractive growth potential and, by bringing Emerald into the Sinochem group, will reinforce our position in the Middle East and South America,' Han said.
Sinochem is offering 750 pence a share, almost 34 percent higher than the closing price on July 10, the last trading day before Emerald said it received an approach.
Emerald said its board of directors unanimously recommended the offer. Kroupeev's Waterford, which owns 29.45 percent of Emerald, has pledged to vote in favour of the deal, as has no. 2 shareholder Soyuzneftegas, which owns 8.08 percent.
Kroupeev told Reuters Emerald was benefiting from working in countries that were 'not flavour of the month' earlier this decade, and said he aimed to reinvest his proceeds in similar exploration and production (E&P) companies.
Russian-born Kroupeev, a one-time director of Dana Petroleum and Sibir Energy, stands to receive about 138 million pounds for his stake, according to Reuters calculations.
Soyuzneftegas became a shareholder after selling its interest in Syria's Block 26 to Emerald. It operates in Central Asia, North Africa, Syria and Iraq, and is chaired by Yuri Shafrakin, who was Russian energy minister from 1993 to 1996.
In July, Emerald said it had received a takeover approach, continuing a wave of consolidation in the sector and lifting the company's shares.
Standard Chartered advised Sinochem Resources UK Ltd, while Chinese boutique The Balloch Group acted as financial consultant to Sinochem. Harland Capital advised Emerald. -Reuters