Gas warfare

7 June 2018 By Christopher Beddor

A $400 mln deal to sell Sino Gas to U.S. buyout shop Lone Star seems hasty, when the Australia-based firm has just won a key regulatory approval. A 19 pct premium looks ho-hum. If the board sees big risks ahead for foreign energy firms in China, it needs to better explain itself.

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Sino Gas & Energy Holdings said on May 31 that it had agreed to a A$530 million ($406 million) takeover offer from Lone Star, a U.S. private equity firm.

The all-cash bid at A$0.25 per share represents a 19 percent premium to the company’s undisturbed price on May 30.

The board of the Australian company, which has operations in China, said the risks and uncertainties ahead led it to recommend that shareholders accept the offer, subject to an independent expert evaluation.

The company’s investors will vote on the proposal in late August or early September. Lone Star will need approval from 75 percent of votes cast for the deal to move ahead.

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