Sino backs $530m takeover offer

The board of China-focused Sino Gas & Energy Holdings has backed a takeover offer from US private equity group Lone Star, which values the gas producer at $530 million.

Under the scheme implementation agreement, Lone Star will pay 25 cents per share, which represents a 32 per cent premium on the company’s one-month volume-weighted average price.

Sino’s board has unanimously recommended shareholders vote in favour of the agreement.

"The 100 per cent cash consideration represents an attractive premium to recent trading prices, and provides certainty of value for Sino shareholders,” Sino managing director Glenn Corrie said.

“While the Sino Gas directors remain of the view that the business and assets have significant potential, they acknowledge that the cash consideration provides shareholders with cash certain value now versus the future risks and uncertainties associated with the business.”

The agreement is subject to a number of conditions, including shareholder and regulatory approval.

Sino has a 49 per cent interest in Sino Gas & Energy Limited, which operates the Linxing and Sanjiaobei production sharing contracts in the Ordos Basin in China.

Lone Star made an unsuccessful $400 million offer for Waitsia gas field operator AWE in 2016.

The group, which was established in 1995, has organised 17 private equity funds with capital commitments totalling more than $70 billion.  

Allens is acting as Sino's legal adviser, while RBC Capital Markets is acting as financial adviser. 

Shares in Sino were up 14.3 per cent at 24 cents each at 1230pm AEDT.