China Gas Holdings Ltd, the supplier of natural gas to 172 Chinese cities, will buy Fortune Oil Plc's Chinese natural gas operations for $400 million.

Fortune Oil surged in London trading. Hong Kong-based Fortune Oil will receive $200 million in cash and either a $200 million deferred payment or 250 million shares of China Gas, Fortune said in a statement on Monday.

Fortune Oil had a market value of 181 million pounds ($293 million) as of Dec 14. Buying Fortune Oil's gas business will give China Gas pipelines across seven provinces, a coal bed methane block in Shanxi province and compressed and liquefied natural gas operations.

China Daily-Agencies