China Gas Holdings Ltd. , which distributes gas to homes on the mainland, plans to sign an agreement to buy U.K.-listed Fortune Oil PLC's gas distribution assets in China in a US$400 million deal, a person familiar with the matter said Monday.

China Gas will pay for the transaction using cash and options in China Gas shares, the person said.

Fortune Oil, a major shareholder in China Gas, entered the spotlight earlier this year when it and China Gas founder Liu Minghui began fighting off a $2.15 billion takeover bid for China Gas by state oil giant China Petroleum & Chemical Corp. /quotes/zigman/269314/quotes/nls/snp SNP +0.51% , or Sinopec, together with gas supplier ENN Energy Holdings Ltd.

Mr. Liu returned to China Gas in August after he was cleared of embezzlement allegations in China that had resulted in his arrest and sparked the hostile takeover bid.

Last month, Sinopec and ENN Energy terminated their offers to acquire China Gas after failing to get regulatory approval.

Shares of China Gas were suspended from trading Monday morning.