Exxon Mobil to sell stakes in Hong Kong utility assets for $3.4 bn
19 November 2013
US oil giant Exxon Mobil Corp has agreed to sell its stakes in Hong Kong utility joint venture Castle Peak Co Ltd and a power storage firm to CLP Holdings for a combined $3.4 billion.
Under the deal, CLP Holdings, Hong Kong's biggest electricity provider, which holds 40 per cent in Castle Peak, will buy Exxon Mobil's 30 per cent stake for HK$12 billion ($1.6 billion) and take control of Castle Peak, one of Hong Kong's two electricity providers.
Post closing, CLP Holdings will hold 70 per cent stake in Castle Peak.
CLP Holdings will also buy Exxon Mobil's 51 per cent stake in Hong Kong Pumped Storage Development Co for HK$2 billion.
Exxon Mobil will also sell its remaining 30 per cent stake in Castle Peak to China Southern Power Grid Co, owner of China's second largest power distribution network, for an undisclosed sum, but several media reported that China Southern Power Grid also paid HK$12 billion ($1.6 billion).
ExxonMobil, the world's biggest oil company by market value, had hired Barclays to find a buyer for its majority stake in Castle Peak, after having failed to sell the asset for nearly a year. (See: ExxonMobil hires Barclays to sell part stake in Hong Kong's Castle Peak Power: report)
Castle Peak Power is a 1981 joint venture between ExxonMobil and Hong Kong-based CLP Holdings, run by the wealthy Kadoorie family.
Last year, CLP Holdings had teamed up with China Southern Power Grid to buy ExxonMobil's stake, but CLP Holdings had then said that talks had broken down over major differences in valuation.
Castle Peak owns three Hong Kong natural gas, coal and diesel-fired power plants, having a total power generation capacity of 6,908 megawatts, including a 4,108-MW coal-fired plant and a 2,500-MW gas-fired power station.
''By partnering up with CSG in the acquisition, CLP would have more options in terms of importing electricity generated by clean fuels in mainland China to Hong Kong via CSG's grids'', said Richard Lancaster, CEO of CLP Holdings.