Sinopec buys Addax for $7.2 billion

OTTAWA: China's Sinopec has agreed to purchase oil exploration firm Addax Petroleum for $7.2 billion in the largest ever Chinese offshore acquisition, the companies announced on Wednesday.

Sinopec is a subsidiary of China Petrochemical Corporation, the largest oil refiner in Asia and China's second-largest oil company after China National Petroleum Corp.

Addax is based in Geneva, Switzerland, and listed in London and Toronto. It is one of the largest independent oil producers in West Africa and the Middle East, with oil fields in Nigeria and the autonomous Kurdish region of northern Iraq.

The company said it produced an average of 134,700 barrels of crude oil a day in the first quarter of 2009.

According to terms of their agreement, Sinopec will pay 52.80 dollars per Addax share.

The offer represents a 47 percent premium over the closing market price for Addax shares on June 5, just prior to the announcement of takeover talks, the companies said.

As well, it is 137 percent more than its average trading price one year ago.

It is a "very impressive price," analyst Martin Molyneaux, of First Energy Capital, told AFP.

In a statement, Sinopec said "the acquisition of Addax Petroleum is a transformational transaction."

It also marks a new direction for China into Africa and the Middle East, after previously focusing on Central Asia and South America, as well as a first glimmer of investment hope after several failed bids by state-owned siblings.

Last month, China's Aluminum Corp.'s $19.5 billion offer for a part of Anglo-Australian mining giant Rio Tinto PLC was rejected.

China's Cnooc Ltd.'s $18.5 billion bid for California energy company Unocal Corp. also collapsed in 2005, under US political pressure.