China Gas Says Employees Oppose Sinopec Takeover

China Gas Holdings Ltd said on Friday nearly a fifth of its about 20,000 employees oppose a $2.2 billion unsolicited takeover offer from rival ENN Energy and state giant Sinopec Corp .

China Gas Holdings, a piped gas distributor, said its board had received letters late last month signed by almost 4,000 employees, some of whom are also shareholders of China Gas, expressing their opposition.

"The letters express the employees' concerns regarding the potential detrimental impact of the offer on the operations of the company and on the competition in, and development of, the gas industry," China Gas said in a filing with the Hong Kong bourse.

China Gas, which has about 20,000 employees, said in December that the cash bid of HK$3.5 per share from Sinopec and ENN was "wholly unsolicited" and "opportunistic". It said the indicative bid failed to reflect the fundamental value of the company.

Shares of China Gas ended at HK$3.67 per share on Friday, indicating investors believed Sinopec and ENN will have to raise their bid if they want China Gas shareholders to back its acquisition.

Sinopec, China's second-largest oil and gas company and Asia's largest refiner, holds a minor stake in China Gas.

Other holders include SK Holdings Co Ltd, Gail India Ltd and Oman Oil Co.

The battle for China Gas intensified last month as South Korea's SK Holdings tightened its grip on the takeover target, boosting its stake in China Gas to 12.24 percent and said it planned to buy an additional $104 million worth of its shares.

Buying China Gas will give the acquirer access to China's largest portfolio of natural gas projects. The firm has piped gas operations in 151 cities and more than 100 compressed natural gas stations.

Gross profit in the six months ended September jumped 32 percent to HK$1.62 billion ($208 million).

In its stock exchange filing on Friday, China Gas said the letters from the employees "praise the board and senior management of the company for having achieved record financial results and state the employees' belief that the existing management is best placed to manage the company effectively."

Sinopec and ENN were not immediately available for comments.

Sinopec Corp Chairman Fu Chengyu has said the energy giant's joint bid for China Gas would be positive for the target company.

"ENN is a professional city gas distributor and Sinopec is a company with energy security. Cooperation by these two companies will add value to its shareholders," Fu said in December.