Following the Chinalco/Rio saga, Sinopec has made a US$8bn takeover bid overseas, in one of the clearest manifestations yet of the hunger of Chinse corporates for overseas natural resources assets.

Sinopec International Petroleum Exploration and Production Corporation (SIPC), an overseas investment arm of Sinopec Group, has entered into an agreement to acquire Addax Petroleum, a publicly traded company on both the Toronto and London stock exchanges. Upon completion, it will become the largest overseas takeover by a Chinese oil company, breaking the record set by China National Petroleum in 2005, when it acquired PetroKazakhstan for US$4.2bn.

Vinson & Elkins, which represented SIPC in its US$1.9bn takeover of Toronto-listed Tanganyika Oil last year, has been called in again by the client to advise on the Addax deal. Leading the Vinson & Elkins team are Beijing partner Paul Deemer and Shanghai partner David Blumental.

"It's a significant and transformational deal for SIPC," said David Blumental. "Chinese companies are now looking to make larger deals, where in a single transaction they can acquire a lot of assets in different places."

"The trend is that the overseas deals of Chinese oil companies have gone from simple assets purchases to much larger public company takeovers, like SIPC's takeover of Addax and Tanganyika Oil and PetroChina's acquisition of Singapore Petroleum and COSL's acquisition of Norway's Awilco," said Blumental.

By acquiring Addax, SIPC will be able to build stronger operations in West Africa and Iraq, where most of Addax's assets lie.

SIPC is also represented by Canada-based firm Stikeman Elliott, the legal advisor on Canada law. "The transaction indicates that, even in a slower market, there are still deals to be made and that Canadian-based energy companies remain a favourable target," said David Lefebvre, lead partner of Stikeman Elliott's team. "Law firms with international expertise can expect to benefit as many Chinese state-owned enterprises continue to look for M&A opportunities."

Meanwhile, Canadian firm Fasken Martineau is acting for Addax Petroleum. The firm has been corporate counsel to Addax since its IPO and listing on the TSX in 2006. The Fasken Martineau team is led by John Turner, head of the firm's the global mining practice, and Richard Steinberg, head of the M&A practice.

Having completed a number of large-scale M&A transactions, SIPC's in-house legal department - headed by general counsel Zhang Lianhua - has been widely regarded as a top-rated and very competent. In every overseas M&A transaction, the in-house legal department runs the whole process from due diligence to completion, handling most of the PRC legal matters.

According to Zhang, the company doesn't have a fixed panel of external legal advisors, preferring to engage law firms in accordance with the needs of specific projects and the requirements of local law and regulations. Most of the time, it will hire international firms. In the past five years, the three law firms most regularly used by SIPC are Herbert Smith, Vinson & Elkins and Andrews Kurth. Zhang also noted that the role the in-house team plays has been evolving from "cooperating" to "presiding".

Getting a large M&A deal signed is significant, but there is still some way to go and a lot of work to be done before the deal is successfully closed. Having witnessed the collapse of the Chinalco/Rio deal, everyone involved in this transaction will continue to be under pressure until the final closure.