Shares in U.K. oil and gas explorer Emerald Energy PLC (EEN.LN) rose sharply Wednesday after its board recommended shareholders approve a takeover proposal from China's state-owned Sinochem Corp., which values it at GBP532.1 million.

Emerald said in a statement the tie-up offers Sinochem the opportunity to expand its exploration and production in the Middle East and Latin America by enhancing its reserve base in Syria and Colombia.

Sinochem's interest in Emerald is just one of a string of moves this year by Chinese companies to build up foreign energy and minerals holdings, the largest of which was Aluminum Corp. of China, or Chinalco, in February paying $14 billion for a 9% stake in Anglo-Australian mining-giant Rio Tinto PLC (RTP).

More recent was news Monday that China National Petroleum Corp. and Cnooc Ltd. (CEO) have proposed paying at least US$17 billion for all of Repsol YPF SA's (REP) stake in its Argentine unit YPF SA.

Under the terms of the offer Wednesday, shareholders of Isle of Man-based Emerald Energy will be entitled to 750 pence in cash for each share, representing a 33.81 pence premium to the closing price on July 10, the last business day prior to an announcement from Emerald that it had received an approach.

Emerald didn't reveal at that time that the proposal was from Beijing-based Sinochem, China's fourth biggest oil firm by assets.

The Emerald board said it considered the terms of the proposal from Sinochem "to be fair and reasonable" and unanimously recommended shareholders vote in favor.

At 0825 GMT, shares in Emerald were trading up 62 pence, or 9.2%, at 737 pence, more than double the previous 12-month low of around 300 pence seen in October and November.

Emerald's chairman, Alastair Beardsall, said the offer represents fair value for shareholders, realistically reflecting its business and assets.

Sinochem's president, Han Gensheng, said the acquisition is another step in building a global energy company. The company's spokesman in Beijing was unavailable.

Sinochem is also involved in another potential takeover, of Australia's Nufarm Ltd. (NUF.AU), which has a market capitalization of A$2.51 billion.

On July 24, Australian crop protection company Nufarm said it had been approached about a potential takeover by Sinochem. Sinochem characterized its contacts with Nufarm as being at a preliminary stage.

"This is one of a range of potential growth opportunities that Sinochem is currently exploring," the Chinese company said at the time.

An energy analyst at a U.S. bank said there is consensus between Chinese companies, the government in Beijing and regulators that now is the time for them to go out and buy foreign assets.

"For a lot of China companies, if they are not doing their bit and acquiring foreign resources, it makes them look bad, so I think everybody wants to get on the bandwagon," the analyst said.

Other deals by Chinese companies in recent months include China Petrochemical Corp., which is also known as Sinopec, acquiring Swiss-based oil explorer Addax Petroleum Corp. (AXC.T) for US$7.2 billion.

In April, CNPC purchased Kazakh oil producer MangistauMunaiGas jointly with Kazakhstan's state-owned KazMunaiGas for US$3.3 billion.

Company Web site: www.emeraldenergy.com

-By Elizabeth Adams, Dow Jones Newswires; +44 (0) 20 7842 9386; elizabeth.adams@dowjones.com

Simon Hall in Beijing and Aries Poon in Hong Kong contributed to this story.
Nufarm (ASX:NUF)
Historical Stock Chart
From Dec 2024 to Jan 2025 Click Here for more Nufarm Charts.
Nufarm (ASX:NUF)
Historical Stock Chart
From Jan 2024 to Jan 2025 Click Here for more Nufarm Charts.