Sinopec to privatize Beijing Yanhua after merger with Beijing Feitian

15-Feb-05

Beijing Feitian Petrochemical Co. Ltd. (a wholly owned subsidiary of Sinopec Corp.) has entered into a merger agreement with Beijing Yanhua. China Petroleum & Chemical Corporation, (Sinopec Corp.), Beijing Feitian and Beijing Yanhua Petrochemical Co. Ltd (Beijing Yanhua) jointly announced the merger agreement followed by a proposal to privatize Beijing Yanhua by way of "merger by absorption". The proposed merger will consolidate and strengthen the management of Sinopec Corp. and Beijing Yanhua. Beijing Yanhua's petrochemical business will be consolidated into Sinopec Corp.'s integrated oil and petrochemical operation under a leaner and more efficient group structure. The proposed merger will also lead to consolidation of Sinopec Corp.'s resources and realize potential synergies. After the proposed merger, Sinopec Corp. can leverage its brand name, marketing capabilities and distribution network to achieve economies of scale and reduce operation cost. The merger will effectively eliminate intra-group competition.