Bloomberg News

ENN Energy Slumps on Concern It May Need to Raise China Gas Bid

January 12, 2012

Jan. 12 (Bloomberg) -- ENN Energy Holdings Ltd., the gas supplier making a joint bid for China Gas Holdings Ltd., fell the most in more than 1 1/2 years on concern that it may need to increase its offer after investors raised stakes in the target.

The shares fell 8.1 percent to close at HK$22.05, the biggest decline since June 2, 2010. China Gas advanced 0.8 percent in Hong Kong to HK$3.70, while the benchmark Hang Seng index fell 0.3 percent.

China Gas, which distributes natural gas in 20 Chinese provinces, rebuffed a HK$15.3 billion ($2 billion) hostile takeover offer by ENN Energy and China Petroleum & Chemical Corp. on Dec. 14. South Korean investment group SK Holdings Co. and Fortune Oil Plc increased their stakes in the company this week, filings with the Hong Kong Securities and Futures Commission show.

“Since SK wants to increase its stake, there’s more concern among investors that ENN may have to raise its bid,” said Kenny Cheung, a Hong Kong-based analyst at Core Pacific- Yamaichi International Ltd. “The market won’t welcome ENN Energy raising the bid from the current price,” he said.

Fortune Oil bought 11.1 million shares of China Gas over the past two days, according to the filings. SK E&S Co., a unit of SK Holdings, acquired 2.16 million shares on Jan. 10, the company said in a filing.

SK E&S plans to spend as much as 120 billion won ($104 million) to buy additional China Gas shares, Reuters reported today, citing an unidentified spokeswoman for SK Holdings.

--Editors: John Chacko, Alex Devine

To contact the reporter on this story: Michelle Yun in Hong Kong at myun11@bloomberg.net

To contact the editor responsible for this story: Amit Prakash at aprakash1@bloomberg.net


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