Sinochem to acquire South Korean firm
By Zhang Jin (China Daily)
Updated: 2004-06-18 09:16

China National Chemicals Import Export (Sinochem ), China's largest chemicals trader, is in the process of taking over Inchon Oil Refinery, a bankrupt South Korean company.

Sinochem and Inchon entered into a preliminary agreement, or a memorandum of understanding, in late May, said sources from Inchon, South Korea's fifth largest oil refinery.

Sinochem was picked over three South Korean bidders, and the deal will be worth approximately US$556 million, sources said.

The South Korean bidders were Paul Oil, Ko Pec and STX, which owns STX Shipbuilding.

It is also said Sinochem has offered a down payment to Inchon and will sign a final agreement in a few months, probably in August.

"The deal is still under negotiation," said Wang Zongshao, who is in charge of mergers and acquisitions at Sinochem.

"And our application to the National Development and Reform Commission is also in process," he said.

Overseas investment that exceeds US$1 million has to be approved by the commission.

Wang also confirmed Sinochem has given a certain amount in down payment, but he refused to reveal the amount.

"We will announce the deal after it is finally signed," he said. "Now we are not going to say too much."

Analysts say the deal is very likely to obtain approval, as the country is experiencing a raw materials shortage and is pushing a "go-global" campaign for large State-owned firms.

China's economy grew at the brisk pace of 9.7 per cent in the first quarter, driving increased demand for fuel and raw materials.

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