Financial Times: Exxon mulls sale of Sinopec holding (ShellNews.net)
By Francesco Guerrera in Hong Kong
Posted 28 July 04
ExxonMobil is considering selling its 19 per cent stake in China Petroleum & Chemical (Sinopec), the state-controlled oil group, in a move that could raise some US$1.2bn for the US oil major - nearly double what it paid four years ago.
Such a move would complete the withdrawal of the international groups that bought into Sinopec's overseas initial public offering in 2000 in a show of support for China's fast-growing oil industry.
Earlier this year, BP and Royal Dutch Shell sold their stakes in Sinopec, Asia's largest oil refiner, raising about US$745m each.
The disposals are a sign of the waning importance of "strategic investors", which have been widely used by Chinese state-owned companies to support their IPOs and bolster their international reputation.
People close to the discussions said Exxon was looking at selling at least part of its stake by placing it on the market.
However, they warned that no decision on whether to go ahead with the sale had been made and the timing and size of any offering would depend on market conditions.
Sinopec's shares have risen sharply since they were listed at HK$1.59 in October 2000 and yesterday closed at HK$3.075.
At that price, Exxon's 3.2bn shares in Sinopec are worth HK$9.8bn (US$1.2bn).
However, the current Sinopec price is below the price at which BP and Shell sold their stakes.
Analysts said Exxon was likely to aim to place its stake at a small discount to the market price - in line with BP and Shell - but might wait for a recovery in the shares before selling.
Sinopec's stock could be boosted by the company's interim results, which are due on Friday , a day after Exxon's second-quarter results announcement.
Market observers said Exxon could find it difficult to sell such a large stake during the traditional August lull when many fund managers are on holiday.
"It would be a very big chunk of equity for the market to digest, although Sinopec is seen as a good company," a Hong Kong-based trader said.
ExxonMobil said: "We certainly haven't made any announcement on Sinopec, and we don't comment or speculate on future plans or activities or rumours associated with those activities."
Sinopec and Exxon co-operate on operations such as building petrol stations, but the Chinese oil major was not allowed into an exploration project in Kazakhstan when western companies, including Exxon, exercised pre-emption rights.
Additional reporting by Sheila McNulty in Houston