Shares in ENN jumped today after the Chinese natural gas supplier said that it plans to privatize its Hong Kong-listed subsidiary ENN Energy through a tender offer, and then re-list itself in Hong Kong through introduction, which means that it will apply to go public without fundraising, in order to consolidate its resources and better serve end customers.
On its first day of trading after trading was halted for over a week pending the announcement of the deal, ENN’s share price [SHA: 600803] closed up 1.3 percent at CNY19.93 (USD2.0). Earlier in the day it soared 4.9 percent to CNY20.63 after initially losing ground.
ENN Energy’s stock [HKG: 2688] finished the day up 11.3 percent at HKD66.20 (USD8.30) after surging 17.3 percent earlier in the day.
ENN will purchase shares in ENN Energy through a combination of cash and newly issued Hong Kong shares, according to the asset acquisition plan released last night. Shareholders will receive HKD24.50 (USD3.15) in cash and 2.94 newly issued shares for each share they hold in ENN Energy.
The proposed deal values ENN Energy at HKD80 (USD10.30) per share, according to Somerley Capital. This is a 35 percent premium over its closing price of HKD59.45 on March 18, the last day before trading was suspended.
Once the deal goes through, ENN’s stake in ENN Energy will increase to 100 percent from 34.2 percent. However, the company’s main business operations and its controlling shareholders will remain unchanged, it said.
The deal will improve ENN's ability to leverage its natural gas resources as well as the storage and transportation capacity of its liquefied natural gas terminals, so as to enhance ENN Energy’s services to its downstream customers, the Langfang-based company said.
The move will help ENN better align with the needs of ENN Energy’s customers, improve the operational efficiency at the Zhoushan LNG terminal, and enhance the company’s overall resilience and market competitiveness, it said.
Both firms logged disappointing performances last year, according to their 2024 financial reports released yesterday. ENN’s net profit plunged 36.6 percent from the year before to CNY4.4 billion (USD605.9 million), due to asset sales that inflated the 2023 base line.
While ENN Energy posted a 12.2 percent dive in net profit to CNY5.9 billion (USD812.5 million). The firm was affected by tumbling international gas prices and a downturn in the domestic real estate sector, which hurt its natural gas sales.
Both companies are subsidiaries of ENN Group. ENN focuses on upstream natural gas procurement, midstream storage, transportation and infrastructure development, while ENN Energy is primarily involved in the downstream sales market and is one of the top five city gas suppliers in the country.
