CAO acquires HK, N. America operations from parent firm

China Aviation Oil (Singapore) Corporation Ltd., or CAO, has entered into an agreement to acquire the business operations of its parent firm in China's Hong Kong and North America.

The two acquisitions will be worth US$16 million in total, local media reported on Wednesday.

The China Aviation Oil (Hong Kong) Company Limited (CAOHK), a wholly-owned subsidiary of China National Aviation Fuel Group Corporation (CNAF), will be acquired at a consideration of 91 million Hong Kong dollars (US$12 million), CAO said on Tuesday.

CAOHK was established in 1998 and is principally involved in jet fuel trading and supply of jet fuel to airline companies at airports in Chinese cities, including Taipei and Hong Kong, as well as cities like London.

The other firm to be acquired, North American Fuel Corporation (NAFCO), started its operations in 2010 as an agent and wholesale business in the United States. It commenced its agency business for local fuel suppliers and major Chinese airlines since early 2011.

Wang Kuai Yuen, deputy chairman and lead independent director of CAO, said the acquisitions were in line with CAO's strategy of globalization.

"In view of the globalised trading flow of oil products, a strategic focus of CAO is to establish a global trading network by 2014," Wang said. "CAOHK and NAFCO are synergetic assets that can create additional value to our trading activities."

"This transaction is a significant step for CNAF in consolidating its overseas operations into CAO. CNAF believes this will help accelerate the pace of CAO establishing a global business network," said Sun Li, chairman of CAO and the mother firm CNAF.

"As CAO is the core entity for CNAF's internalization strategy, CNAF will continue to support CAO's growth initiatives," he said.

CAO is the largest physical jet fuel trader in the Asia Pacific region and the key supplier of imported jet fuel to the Chinese mainland civil aviation industry. It is listed on the Singapore Exchange.