Vitol Raises Bet on China’s Energy Industry With Fortune Oil Bid
(Bloomberg) — Vitol Group has joined a group bidding to take oil and gas storage company Fortune Oil Plc private as the world’s biggest oil trader boosts its investments in China.
The group, which also includes Fortune Oil managers, led by Vice Chairman Daniel Chiu, is offering 10 pence a share for the 43 percent of the London-listed company it doesn’t already own, according to a stock exchange statement from Fortune Oil. The cash bid represents a 30 percent premium to Fortune Oil’s average closing price over the past three months and values the company at 259 million pounds ($405 million).
A successful bid will see Vitol increase its stake to 30 percent of Fortune Oil, which has has interests in oil and products terminals, an aviation fuel-supply business and an 18.6 percent stake in China Gas Holdings Ltd. Traders who own or have access to storage can lock in profits because the oil market has since July been in contango, a situation where the current spot price is lower than the future one.
“This is a potential opportunity for Vitol to increase its long-term exposure to the Chinese gas sector,” said Fabian Gmuender, a spokesman for the Rotterdam-based company.
Fortune Oil rose 51 percent to 9.50 pence as of 1:16 p.m. in London trading, the largest increase in 21 years. Before the bid was announced, the shares had fallen by a third this year.
Fortune’s stock performance has in recent years been “disappointing,” Chiu, the company’s largest shareholder with about 28 percent of the stock, said in a statement. Vitol currently owns 5.69 percent of Fortune Oil directly and 45 percent of a holding company that owns a further 23.2 percent.
Fortune Oil Chairman Qian Benyuan said in a statement that the company’s independent directors unanimously recommend the offer. Vitol Chief Executive Officer Ian Taylor, who has been a director of Fortune Oil since 1993, was excluded from a takeover panel considering the bid.
To contact the reporter on this story: Andy Hoffman in Geneva at ahoffman31@bloomberg.net To contact the editors responsible for this story: Will Kennedy at wkennedy3@bloomberg.net Dylan Griffiths, Ana Monteiro
