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

CNPC, China's largest oil producer, announced Monday that it had agreed to participate in the acquisition of PetroKazakhstan, a Canada-based company, through its wholly owned subsidiary CNPCI, by offering 55 US dollars per share in cash for all shares of PetroKazakhstan.

The offer, totaling 4.18 billion US dollars, represents a premium of 24.4 percent based on the weighted average closing price of PetroKazakhstan common shares on the New York Stock Exchange for the twenty previous trading days ending Friday and a 21.1 percent premium to the closing price on Friday, the most recent date on which the shares traded.

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

According to the announcement on the official website of PetroKazakhstan, The transaction requires the approval of 66 percent of PetroKazakhstan's shareholders at a meeting of shareholders expected to be held in October and other conditions including court approvals.

According to the agreement between CNPCI and PetroKazakhstan, the Board of Directors of PetroKazakhstan can recommend a more preferential proposal to its shareholders. However, if it terminates its agreement with the CNPCI, it would breach its fiduciary duties and pay a termination fee of 125 million dollars.

The Proposed transaction is expected to close in October. 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.