Money Matters, Simplified.
PetroChina acquires 45.5 percent stake in SPC
Beijing, May 25: Asia's largest oil and gas producer, PetroChina Company Limited (SEHK: 0857, SSE: 601857, NYSE: PTR) has agreed to acquire a 45.5 percent stake in the Singapore Petroleum Company Limited (SGX: S99) for a sum of $1.47 billion.
The Deal
The agreement was signed between PetroChina's wholly owned subsidiary, PetroChina International (Singapore) Pte Ltd, and Keppel Oil and Gas Services, part of Singapore-based conglomerate Keppel Corp. (SGX: BN4).
In a statement made to the Hong Kong Stock Exchange late Sunday, PetroChina said that it is, through its subsidiary, paying S$6.26 for each share of Singapore Petroleum. The price represents a 24 percent premium to Singapore Petroleum's latest traded share price.
The deal now waits for an approval from the Chinese regulators. PetroChina will make a general offer for the rest of the company under Singapore's takeover code, if the approval is received on or before July 24.
Strategic move
The accord confirms China's persistent motivation in widening its reach in the worldwide natural resources domain. In a statement, PetroChina said that the acquisition is likely to become "a new platform for the implementation of our international strategy and will provide a broader foundation and stable path for development."
At this point in time, lower oil prices have made acquisitions of oil-related asset cheaper. Thus circumstances are thus propitious for cash rich Chinese state oil companies to go on an acquisition binge.
On the other hand, sale of SPC stake with enable Keppel to focus more on its core businesses, the building of oil rigs and property development.
About SPC
The Singapore Petroleum Company is involved in the exploration and production of petroleum, refining, trading and distribution of petroleum products.
The regional energy company also owns a 50 percent stake in Singapore Refining Co., one of Singapore's three major petroleum refiners.
SPC has exploration interests in Australia, China, Indonesia and Vietnam. It generated revenues of S$11.1 billion and net profit of S$230 million in 2008.