Did Sinopec Overpay by 20% for Syncrude Stake?
Yesterday, Sinopec agreed to pay $3.65B for ConocoPhillip's (COP) 9% stake in Syncrude Canada. Macquarie Securities had pegged the value at only $3B. While the deal may be more then some estimates, it doesn't mean that they overpaid for the asset. Commodities and especially oil don't have static prices so the value really depends on where oil goes over the next few years. If oil creeps back over $100, then China/Sinopec likely made a wise deal. If anything the deal signals the demand China expects in the next decade. Paying 20% now may seem very cheap if we revisit the old highs which is likely very dependent on China demand. Who better to know those needs then China itself. The market might want to listen to what their saying with this purchase. The company known as Sinopec Group agreed to pay at least $650 million more for ConocoPhillips ’s 9 percent stake in Syncrude Canada Ltd. compared with an estimate by Macquarie Securities. The premium could have been narrowed by ...