The Board of Directors of PetroKazakhstan Inc (PK) has approved the acquisition proposal of China National Petroleum Corporation International (CNPCI) and will recommend that its shareholders accept the offer, sources with the China National Petroleum Corporation (CNPC) said on Tuesday.

CNPC, China's largest oil producer, announced on Monday that it had made an offer to acquire PK, a Canada-based company, through its wholly owned subsidiary CNPCI, at US$55 per share in cash for all shares in PK.

The offer, totaling US$4.18 billion, represents a premium of 24.4 percent based on the weighted average closing price of PK common shares on the New York Stock Exchange for the twenty previous trading days ending Friday August 19.

If successful, it would be the biggest overseas acquisition transaction made by a Chinese company.

According to an announcement published on PK website, the transaction requires the approval of 66 percent of PK shareholders at a meeting expected to be held in October. Other conditions include court approvals.

According to the agreement between CNPCI and PK, the Board of Directors of PK can recommend a more preferential proposal to its shareholders. However, if it terminates its agreement with CNPCI before the specified offer expiry date, PK will have to pay an early termination fee of US$125 million.

Registered in Canada, PK is a vertically integrated international energy company listed in the United States, Canada, the United Kingdom, Germany and Kazakhstan with an annual oil output of over seven billion tons.

(Xinhua News Agency August 24, 2005)