Canada's Couche-Tard makes short-list in $16 billion Sinopec unit sale: sources
Updated: 2014-08-20 11:16
(Agencies)
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Big deal
The planned divestment comes at a time when Sinopec's domestic fuel sales growth rate has slowed due to falling demand. Gross margins shrank to 2.3 percent in 2013 from 3.3 percent in 2011 and Barclays said in a report that a $1 fall in fuel margin from the current high level of $15-16 per barrel could lower Sinopec Sales net profit by 16 percent.
The sale is expected to generate between $16-20 billion for Sinopec, money which Asia's biggest refiner may use to pay down some of its debt and to reinforce upstream investments. If successful, the sale would mark Asia's second-biggest M&A trade this year, after CITIC Pacific's $36 billion purchase of its parent CITIC Group's assets.
The deal is set to value Sinopec Sales at between $53-66 billion, giving it a price-to-earnings multiple of 13-16.3, according to Reuters calculations.
Sinopec unveiled plans in February to restructure the business, which also includes oil-products pipelines and storage facilities across China.
Advising Sinopec on the sale are China International Capital Corp, Deutsche Bank, CITIC Securities Ltd and Bank of America.
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