China’s ENN to buy Santos stake
Gas distributor ENN will buy a $US750m stake in Santos from largest single shareholder, China’s Hony Capital.
A Chinese gas distributor will buy an $US750 million stake in Australian oil and gas producer Santos from the current largest single shareholder, Chinese private equity firm Hony Capital.
ENN Ecological Holdings, an arm of the ENN Group, a large private distributor of gas in the growing Chinese market and a substantial player in Australia, will buy the 11.7 per cent stake to become the largest shareholder in Santos (STO).
The move follows a $7 billion takeover bid for Santos last October by Scepter Partners, a firm led by former members of Blackstone’s Asian team and representing Brunei and Dubai royalty wealth, which Santos rejected.
ENN shareholders must approve the move, but the takeover will be the group’s first exposure to the upstream part of the gas market, ENN said, as it aims to develop into a vertically integrated international natural gas company.
In an announcement this morning, Santos said it welcomes the ENN Group onto the register as a shareholder “with obvious knowledge of the gas business across the region”.
As part of the transaction Hony Capital will become a strategic investor in the ENN Group through a private placement, of new shares, equivalent to $US380m.
ENN chairman Wang Yusuo said the proposed acquisition was an exciting move for the company.
“This introduction to the upstream sector takes us a step forward in our aim to generate value across the entire natural gas value chain, and allows us to learn and build experience,” Mr Wang said.
Since 2014, the Shanghai-listed ENN Group has been developing its strategic upstream and midstream platform with a series of acquisitions, the latest of which is the proposed Santos share acquisition.
Hony chairman John Zhao said the group “prides itself” in taking a long-term view and had invested in Santos because of its strategic position in Australia and synergies with the rapidly growing China energy market.
“Bringing in ENN as a strategic investor will help Santos connect to that opportunity in China, and at the same time we are helping a Chinese company expand internationally,” he said.