Reuters: “State-controlled CNOOC Ltd launched China’s richest foreign takeover bid yet on Monday by agreeing to buy Canadian oil producer Nexen Inc for $15.1 billion, forcing Ottawa to decide whether security concerns outweigh its desire for foreign investment in its energy resources.
CNOOC, China’s third-largest oil company, hopes to sell the deal to shareholders and the government with a hefty 61 percent premium to Nexen’s Friday stock price. It promised to retain all employees and to make Canada home base for its Western Hemisphere operations.
CNOOC is offering $27.50 cash a share for Nexen, which has oil sands operations in the Canadian province of Alberta, shale gas in the province of British Columbia and extensive exploration and production holdings in the North Sea, Gulf of Mexico and offshore West Africa.
The initial shareholder reaction was enthusiastic. Shares of Nexen, whose board unanimously approved the deal, surged C$9.06, or 52 percent, to C$26.35 in Toronto on Monday.
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The move is the most ambitious foray by resource-hungry China into North American energy since a 2005 attempt to buy U.S.-based Unocal for $18.5 billion was thwarted by a political backlash there.
Chinese companies have been among the most aggressive in targeting assets around the globe to help feed demand in the world’s second-biggest economy.
As for Canada, Prime Minister Stephen Harper has pushed to attract more energy investments from China. The CNOOC deal shows his efforts are bearing fruit, and Canada has more reasons to accept the deal than to veto it.
“For Canada, this agreement provides a stable source of investment for the many projects that Nexen operates, which includes the exploitation of bitumen in Alberta,” CNOOC Chief Executive Li Fanrong said in a conference call.
“Because we intend to be a local company as much as a global one, we also intend to seek a listing for CNOOC Ltd on the Toronto Stock Exchange.”
The deal is subject to a review by the Industry Ministry, which by law must decide if the takeover would bring a “net benefit” to Canada.
In its favor is both CNOOC’s commitments to Canada, and the fact that Nexen’s operations are mostly outside Canada.”
via CNOOC to buy Nexen for $15.1 billion in China’s largest foreign deal | Reuters.
See also: https://chindia-alert.org/2012/02/13/pattern-of-chinese-overseas-investments/
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