Sino Gas & Energy Holdings Limited (ASX: SEH) is heading towards privatisation. The board unanimously recommended that shareholders vote in favour of private equity firm Lone Star's proposal for the acquisition of 100% of the company's shares.
Lone Star offers a $0.25c a share cash consideration that entails a 19% premium on yesterday's closing price of $0.21c and values Sino Gas at $530 million.
Sino Gas develops Chinese unconventional gas assets through production sharing contracts with local partners. Its share price has grown 130% in the past year, as revenue increased on the back of surging demand for gas in China.
Lone Star is eager to earn a spot in the market, while shareholders may want to cash in now to avoid future risks with a business that is promising, but yet to be fully developed.
Shareholders will vote on the proposal in August. The transaction is also subject to approval from the Foreign Investment Review Board and the conclusion of discussions with China United Coalbed Methane on the amendment of the production sharing contract for Linxing, Sino's largest gas asset.
Investors don't seem wary of any of these conditions, and on Thursday the stock rocketed 19% higher, reaching the offer price of $0.25c.
