US major ExxonMobil has divested its power generation business in Hong Kong, selling its 60% stake in Castle Peak Power to existing partner CLP Holdings and China Southern Power Grid, CLP said Monday.
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The deal, including the divestment of ExxonMobil's majority stake in a pumped storage entity, is valued at HK$26 billion ($3.4 billion).
A spokeswoman for ExxonMobil in Hong Kong said Tuesday the sale was part of the company's routine review of its business portfolio.
"We continuously assess opportunities for growth, divestment or restructuring to see if they fit in with our overall business objectives."
In a filing to the Hong Kong Stock Exchange, CLP said it and CSG will each buy a 30% stake in the power company -- known as Capco -- from ExxonMobil, which will result in CLP raising its stake from 40% to 70% and CSG owning the remaining 30%.
CLP said its share of the acquisition in Capco will amount to HK$12 billion and the consideration was decided "after arm's length negotiations between the parties". Media reports of ExxonMobil's intention to sell the power business had surfaced in March this year although talks between the three companies had reportedly stalled over disagreement on valuations.
In addition, CLP said Monday it will also acquire all of ExxonMobil's 51% interest in Hong Kong Pumped Storage Development Co. for HK$2 billion. CLP will now own 100% of PSDC, which has contractual rights to use the Guangzhou Pumped Storage Power Station.
Capco owns three power stations in Hong Kong with total power generation capacity of 6,908 MW -- the Castle Peak Power Station, the Black Point Power Station and the Penny's Bay Power Station.