China New Energy Group Company, a vertically integrated natural gas company engaged in the development of natural gas distribution networks, and the distribution of natural gas to residential, industrial and commercial users in China, recently announced that the company has entered into an agreement to acquire a 70 percent equity interest in Beijing Century Dadi Gas Co., Ltd. and its affiliated companies (collectively, “Dadi Gas”). Dadi Gas supplies natural gas and develops gas pipeline networks in Northern China.
The total purchase price for this equity transfer agreement will be determined based on a multiple of Dadi Gas’s net profits for the fiscal year ended December 31, 2009; however, the purchase price has been capped at RMB 392.15 million (approximately US $57.5 million). In order to close the transaction, Dadi Gas must transfer of all of its permits and other rights to operate its urban gas pipelines to China New Energy Group.
Mr. Yangkan Chong, chief executive officer of China New Energy Group, stated, “Upon completion, our acquisition of a majority stake in Dadi Gas will expand China New Energy’s business into Northern China, including the Beijing metropolitan area, one of the most important markets in the country.” Mr. Chong continued, “The Northern China region is densely populated, prosperous, and has a rich supply of natural gas. We are executing our strategy to grow our customer base, diversify our revenue, and build shareholder value through key acquisitions, and this is an important step in our transformation into a truly national gas company.”