News of the buy-out boosted mainland shares in two other subsidiaries dual-listed in Hong Kong and Shanghai by up to 6% on Wednesday, on hopes Sinopecs move to trim management overlap and make itself easier to run would trigger more deals.
After Sinopec unveiled a plan late last year to buy out Zhenhai Refining & Chemical Co Ltd, analysts had calculated that Sinopec would need to pay over $4 billion to buy 10 or so remaining baby Sinopecs listed in Hong Kong and China.
Beijing kicked off state-owned share reforms last year, which provides another reason behind Sinopecs privatisation and accelerates the process, said May Yu, an analyst with BNP Paribas Peregrine. Sinopecs Hong Kong stock ended down 2.11% at HK$4.65, underperforming a 0.9% fall in the wider market, after some analysts fretted that Sinopec might be over-paying.
Listed in 2000, the firm was formed by combining government stakes in a dozen listed oil and petrochemical firms, bequeathing it with a disjointed corporate structure that analysts say has hindered management of capital and resources. A sleeker corporate structure could prove crucial as Sinopec and larger rival PetroChina Co Ltd heed Beijings call to buy and operate overseas oil resources, to alleviate the countrys heavy reliance on imported crude.
Now, Sinopec would take private Qilu Petrochemical Co Ltd, Yangzi Petrochemical Co Ltd, Zhongyuan Petroleum Co Ltd and Shengli Oil Field Dynamic Group Co Ltd, two sources told Reuters. The company continues to integrate its business, but the privatisation will need board and shareholder approval, a senior Sinopec executive told Reuters on condition of anonymity.
Sinopec moved last year to take private Zhenhai Refining, and it has done the same for plastics maker Beijing Yanhua.