Bank of America Securities has issued a research note stating that the privatization proposal for ENN ENERGY (02688) has been terminated.

According to the report, ENN Natural Gas Co., Ltd. (600803.SH), the parent company, determined that further extending the final deadline for the plan would introduce greater uncertainty and restrict its operations under the Takeovers Code. Considering changes in the macroeconomic environment and business plans, ENN Natural Gas decided to call off the privatization transaction.

The bank's analysis indicates that terminating this deal could negatively impact ENN Energy's corporate governance image, suggesting the parent company may be prioritizing its own interests over those of minority shareholders.

The termination also reflects the increasing challenges faced by natural gas distributors, as the anticipated structural decline in gas costs following conflicts in the Middle East may be delayed.

However, ENN Natural Gas has announced its intention to increase its stake in ENN Energy. The bank interprets that any share purchases over the next 12 months will likely be capped at under 2% to avoid triggering a mandatory general offer.

Consequently, any future privatization initiatives for ENN Energy would need to observe a mandatory 12-month cooling-off period before being reconsidered.