China's Sinopec (NYSE: SHI) Acquires Addax Petroleum for $7.2B

Sinopec (NYSE: SHI), the Chinese oil refinery, announced Wednesday that will acquire Addax Petroleum Corp. (TSX:  AXC) for $7.2 billion.

The deal will be the largest overseas takeover ever by a Chinese company. In the past, China’s aggressive acquisitions and investments in the oil industry have caused forceful opposition from other countries.

Four years ago, China National Offshore Oil Company Ltd. withdrew an $18.5 billion bid for the Unocal Oil Company because of a tremendous backlash in Washington.

This month, miner Rio Tinto PLC of Australia turned away a $19.5 billion investment from the Aluminum Corp. of China after it caused a political firestorm, according to Associated Press.

Sinopec, a refiner, would gain access to substantial reserves in West Africa and the Middle East if the acquisition of Addax is approved.

Addax, which previously said it was considering a sale, said Wednesday its board unanimously backed the deal, which still must be approved by regulators. The Swiss company is listed on exchanges in London and Toronto.

Addax said it produced 134.7 million barrels a day of crude oil in the first quarter of this year.

Sinopec, which is formally known as Sinopec Shanghai Petrochemical Company Limited, is China's biggest refiner by capacity.

Chinese companies are expanding their global market share, but they cannot compete with conglomerates Exxon Mobil Corporation (NYSE: XOM) or Royal Dutch Shell.

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