Sinopec Balks at Rebuff to Hostile M&A Bid 中石化试水敌意收购碰壁
I’ve been watching with interest this week as the acquisition-hungry Sinopec (HKEx: 386; NYSE: SNP) made what many are saying was the first major attempt at hostile M&A by a Chinese company, only to become flustered when it was rebuffed. The rapid development of events shows that major Chinese companies are still neophytes in hostile takeovers, though this case would also indicate that they want to try more of this difficult form of deal making going forward as they look for strategic assets to build up their businesses. To recap, Sinopec surprised the markets earlier this week when it paired with ENN Energy (HKEx: 2688) to launch a $2.2 billion unsolicited bid for privately held China Gas (HKEx: 384), which operates a lucrative natural gas distribution network in China. China Gas fired back that the bid was too low, in a sharp rebuff that Sinopec and ENN clearly weren’t expecting. In the latest development, Sinopec’s chairman has said that now is “not the time” to consider a higher bid, indicating the company is unlikely to make a higher unsolicited offer in the near future. (English article) Frankly speaking, I’m not surprised at the outcome for this first major effort at hostile M&A by a Chinese company. We need to guess a lot as clearly none of the parties are talking, but it doesn’t appear that Sinopec or ENN attempted a friendly takeover before making their hostile bid — a highly unusual occurrence in the world of M&A where the friendly route is always preferred to the hostile one. It also appears that Sinopec and ENN were completely unprepared for the rebuff they received, which again comes as a surprise as hostile offers are almost never accepted and anyone making such a bid usually has a back-up plan prepared that includes a higher bid or more detailed explanation of its actions if and when its original plan is rejected. The rapid developments in this case probably reflect a lack of experience by China’s big state-run firms in hostile M&A, and I suspect we may see Sinopec and ENN quietly enter direct negotiations with China Gas in the next few weeks, which could ultimately result in a deal more to China Gas’ liking. Regardless of the outcome in this case, Chinese firms are likely to see more stumbles in the years ahead as they try to become major global players in both friendly and hostile M&A.
Bottom line: The rapid collapse of Sinopec’s hostile offer for China Gas reflects the former’s inexperience at hostile M&A, and a friendly takeover could come instead in the next few months.
Related postings 相关文章:
◙ 2012: The Year of China Resource M&A? 2012：中国企业的资源并购年？
◙ Pricey M&A, Cheaper Gas Undermine Sinopec 溢价收购和成品油降价 中石化面对双重利空
◙ Sinopec Latest Victim of Environmental Scrutiny 中石化管道工程因环保计划不足被叫停
