A China Gas Holdings Ltd. (384) investor increased its stake in the utility, giving the three largest shareholders control of more than half of the company that's the target of a $2 billion hostile takeover bid.

Beijing Enterprises Group bought 132.4 million China Gas shares yesterday at between HK$3.68 and HK$4 apiece, raising its holding to 17.96 percent, according to a filing to the Hong Kong Securities and Futures Commission today.

Beijing Enterprises Group, the single-biggest shareholder of China Gas, along with a group led by Fortune Oil Plc (FTO) of Hong Kong and South Korea's SK Holdings Co. hold a combined 50.96 percent of the fuel supplier's shares. The investors increased their stake after ENN Energy Holdings Ltd. (2688) and China Petroleum & Chemical Corp. (600028) bid HK$3.5 a share in December to take over the company and extended the acquisition deadline twice.

"This development effectively ends any illusion that the bidders may have been able to get a steal under the current offer price," said Shi Yan, a Shanghai-based analyst at UOB-Kay Hian Ltd. "The bidders can either walk away or raise the offer price substantially."

China Gas, which is scheduled to announce its annual results today, fell 1.6 percent to HK$3.81 as of 1:55 p.m. in Hong Kong. The benchmark Hang Seng index gained 0.1 percent.

China Gas has rejected the takeover bid, saying it's opportunistic and fails to reflect the company's value.

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Zhang Honghai, Chief Executive Officer of Beijing Enterprises Holdings Ltd. (392), the Hong Kong-listed unit of Beijing Enterprises Group, said in Hong Kong on June 11 the parent would consider selling its stake for at least a profit. The Beijing city government-owned group paid as much as HK$4.11 a share, a 17 percent premium to the offer, to increase it stake.

The Fortune Oil-led group, which owns 17.67 percent of China Gas, and SK Holdings with 15.33 percent bought shares at prices higher than HK$3.50 each as ENN and China Petroleum repeatedly rejected the idea of raising the offer.

The three biggest shareholders held 47.9 percent of the company before Beijing Enterprises Group's purchases yesterday.

ENN will host an extraordinary general meeting on July 6 to seek shareholder approval for the takeover proposal. ENN Chief Financial Officer Wilson Cheng said on June 26 he's "confident" shareholders will approve the bid and declined to comment further.