LONDON: Addax Petroleum agreed to a C$8.3 billion ($7.2 billion) all-cash takeover bid from a division of China's Sinopec, the Swiss-based oil and gas group said Wednesday

The deal will give China Petroleum & Chemical Corp., better known as Sinopec /quotes/comstock/22h!e:386 (HK:386 5.69, -0.01, -0.18%) /quotes/comstock/13*!snp/quotes/nls/snp (SNP 72.79, -0.03, -0.04%) a major stake in the Taq Taq oil field in the Kurdistan region of northern Iraq as well as other exploration licenses in Kurdistan and Africa. The Taq Taq field began exports recently, and production could eventually reach 180,000 barrels a day.

It's the second recent oil deal involving Kurdistan after Heritage Oil /quotes/comstock/23s!e:hoil (UK:HOIL 536.00, -9.50, -1.77%) agreed to buy Turkey's Genel Energy in an all-stock transaction earlier this month.

Addax /quotes/comstock/11t!axc (CA:AXC 49.93, +0.18, +0.36%) /quotes/comstock/23s!e:axc (UK:AXC 2,595, 0.00, 0.00%) , which is listed in Canada with headquarters in Switzerland, said it's entered a definitive agreement under which Sinopec will offer C$52.80 in cash for each of its common shares.

The offer, unanimously backed by the Addax board, represents a 47% premium to the closing price on June 5, before Addax announced it was talks over a possible deal.

Addax shares closed Tuesday in Toronto at C$45.65. Its London-listed shares gained about 12% after the announcement.

Formal documentation for the deal is expected in early July, and shareholders will have at least 35 days to accept the offer. It will require acceptance from investors holding at least two-thirds of the stock as well as regulatory approval, including from the Chinese government.

If Addax backs out of the deal or if Sinopec doesn't receive the necessary approval in China, a break-up fee of C$300 million may be payable.

CEO Jean Claude Gandur and Addax & Oryx Group, which founded Addax Petroleum in 1994, have agreed to tender their shares and other senior directors will enter similar agreements.

The total lock-up agreements on shares represent about 38% of the stock.

Addax Petroleum stands to benefit from "increased investment in the business and acceleration of development and exploration plans," said Gandur in a statement.

RBC Capital Markets is acting as financial advisor to Addax, with Fasken Martineau DuMoulin LLP acting as legal counsel.

Simon Kennedy is the City correspondent for MarketWatch in London.

Source >  MarketWatch

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