CALGARY — Addax Petroleum Corp. said Wednesday it has agreed to be acquired by a Chinese oil and gas giant for $8.27 billion, capping off weeks of takeover speculation swirling around the Swiss-Canadian firm.
The company, with offices in Calgary and Geneva, said all its outstanding common shares will be acquired by Sinopec International Petroleum Exploration and Production Corp.
The wholly-owned subsidiary of China Petrochemical Corp. will pay $52.80 per share.
Rumours of the transaction first surfaced in Chinese media earlier this month, with the South China Morning Post valuing the potential deal at $8 billion.
In response to the reports, Addax acknowledged it was in sale talks without disclosing which parties were involved.
BMO Capital Markets analyst Christopher Brown said most of the takeover rumours pointed to Sinopec as the likely acquirer for Addax.
"In addition they had probably the most extensive knowledge of Addax's Nigerian basin than any other bidder would have," he said.
Brown had seen an appropriate sale price for Addax falling between $50 and $55 per share.
"This sells right smack in the middle of what we would hope that shareholders would see for compensation for Addax's interests," he said.
Addax said its board has unanimously approved the deal, which is still subject to regulatory approval. The company added its chief executive and other senior officers will be tendering their shares to the deal as one of the conditions of the sale.
"We are pleased that Sinopec has recognized the highly attractive asset portfolio and exceptional team that we have assembled at Addax Petroleum," chief executive Jean Claude Gandur said in a statement.
"The efforts and accomplishments that Addax Petroleum has achieved thus far will be built on through increased investment in the business and acceleration of development and exploration plans."
Addax shares trade on both London and Toronto stock exchanges.
In Toronto, the stock rose nine per cent, or $4.25, to $49.90 in morning trading.
Addax operates oil and gas exploration properties in Nigeria and Gabon in Africa and in the Kurdistan region of Iraq.
Chinese firms have been on the lookout for acquisitions in the resource sector lately.
"They're looking for large reserves or resource basins to be able to secure their commodity usage in the future," BMO's Brown said.
"This one probably does it for Sinopec for this year. They're probably off the acquisition grid for the time-being. But that doesn't exclude Petro-China to keep going forward on their prospective new opportunities."
In February, Calgary-based Verenex Energy Inc. (TSX:VNX) agreed to be sold to China National Petroleum Corp. for $499 million, but that deal has since hit some roadblocks.
Since Verenex's main asset is in Libya, the company needs the consent of the North African company's government to proceed.
Months after the deal was reached, Verenex and CNPC still have not received Libya's permission. And this week Verenex disclosed that Libya is investigating the firm for improper bidding practices four years ago.
The same risks do not exist for the Addax transaction, Brown said.
"The Nigerian situation is different than dealing with the Libyans. We are far more confident that a transaction will occur in this scenario versus a Verenex situation, which will be just a longer transaction time."
