Addax Petroleum agrees to $8.27B takeover offer

Addax Petroleum Corp. of Calgary has struck an $8.27-billion deal to be taken over by Sinopec International Petroleum Exploration and Production Corp., a Chinese company.

Sinopec will pay $52.80 in cash for each share of Addax. It called the deal a "transformational transaction"that willadvance the company's plan to expand inWest Africa and Iraq.

In trading on the Toronto Stock Exchange, investors sent shares of Addax up more thanseven per cent. The stock closed up $3.31 at $48.96.

The companies said the offer represents a 47 per cent premium to the closing market price of Addax common shares on June 5, 2009, the day before Addax publicly said it was in preliminary discussions with parties regarding a potential transaction.

The board of Addax has unanimously approved Sinopec's offer, and the top executives of Addax have agreed to tender their holdings.

"We are pleased that Sinopec has recognized the highly attractive asset portfolio and exceptional team that we have assembled at Addax Petroleum," company president and CEO Jean Claude Gandur said in a release.

"The efforts and accomplishments that Addax Petroleum has achieved thus far will be built on through increased investment in the business and acceleration of development and exploration plans."

Addax has agreed to pay Sinopec a $300 million breakup fee if the deal is not completed under certain conditions.

The purchase is Sinopec's second Canadian target since September, when it paid $2 billion for Tanganyika Oil Co. Ltd.

Tanganyika has assets in Syria.

Addax had 536 million barrels of proved and probable oil reserves as at Dec. 31,and production of approximately 140,000 barrels of oila day.

It recently began production from the Kurdistan region of Iraq, and has exploration and production offshore and in three West African countries Nigeria, Cameroon and Gabon.