Sino Gas & Energy Holdings Ltd Advances on Takeover offer

  • Sep 05, 2018 AEST
  • Team Kalkine
Sino Gas & Energy Holdings Ltd Advances on Takeover offer

Lone Star, the US private equity fund, will acquire Sino Gas & Energy Holdings Ltd (ASX: SEH) which happens to be Australia’s only indigenous gas producer in China. In this regard, the $530mn (25 cents per share) cash takeover offer got approved by 88 percent of ~70 percent registered voting shareholders. Initially, in May 2018, the deal was perceived to be undervaluing the company and its ability to benefit from the fast-growing Chinese demand for gas. It should be noted that the 25 cents per share offer means a 32 per cent premium to the average trading share price in the month to May 30.

Sino Gas, listed on ASX, started its production in China in late 2014. It is well positioned to benefit from strong Chinese demand for gas since the Chinese government is switching its focus from coal to gas to reduce air pollution. 

There have been some concerns regarding the risks of a small foreign company, Sino Gas, operating in China which happens to be world’s fastest growing market for gas. Particularly, Sino Gas experienced few problems with regards to getting approvals and payments in China.

The deal is expected to get legal approval by 11th Sep 2018.

The stock of Sino Gas surged up by 2% on this news on September 05, 2018.

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