ENN Natural Gas May Drop $12 Billion ENN Energy Buyout

Q: Is founder Wang Yusuo getting cold feet on his own $12 billion corporate consolidation?

Probably not “cold feet” in the personal sense; it looks more like a hard-nosed reassessment of whether the deal can still clear its conditions on time and whether it remains as attractive as it was when proposed. ENN Natural Gas’s $11.6 billion offer for ENN Energy was always pre-conditional, meaning it depended on regulatory and other approvals by a long-stop date. The immediate issue is that the offeror is reportedly weighing whether to extend that deadline. If it does not, the bid would lapse. That points less to founder Wang Yusuo abruptly losing conviction and more to a transaction running into timing, approval and execution risk. There is also a business case for rethinking the bid. ENN Energy’s latest results were solid, but analysts have said the parent’s incentive to privatize may have weakened over the past year. Higher LNG prices and broader trading opportunities can make the parent’s existing structure relatively more appealing, while the benefits of folding in the Hong Kong-listed unit may look less compelling than before. At the same time, Wang still controls the broader ENN empire and has a long record of consolidating influence across the group. Nothing in the available information suggests he is retreating from control of the business. The more plausible reading is that he may be unwilling to keep pushing a large, complex buyout if the regulatory path and economics no longer justify it.

1 articles · Updated · Bloomberg · Jun 12

ENN Natural Gas is weighing abandoning its nearly $12 billion take-private offer for Hong Kong-listed ENN Energy, according to people familiar with the matter.
The potential retreat hinges on timing: the company may choose not to extend the deadline for meeting pre-conditions tied to the transaction.
ENN Natural Gas is ENN Energy's biggest shareholder, making any decision on the bid central to the unit's ownership outlook.
The deliberations are still private, leaving the fate of one of the larger proposed buyouts in Hong Kong uncertain.