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CNOOC bids US$ 15.1 billion for Nexen

Oilfield Technology,


The board of Canada’s Nexen Inc. has agreed to a generously valued takeover bid made by China’s CNOOC. The bid worth US$ 15.1 billion will see CNOOC pay US$ 27.50 for every common share in the Canadian company, a value that marks a premium of 61% on last week’s closing share price. News of the bid caused Nexen’s shares to rise by more than 50% to US$ 26.35.

The deal, which is still subject to shareholder, regulatory and government approval, has raised some issues about the wisdom of what is seen as ‘selling off’ control of the country’s national resources to a foreign government. Some analysts have pointed out how the deal holds a striking resemblance to CNOOC’s US$ 17 billion bid in 2005 for Unocal. That particular deal was blocked by US lawmakers, who were uncomfortable with the idea of allowing energy assets to be controlled by a foreign state-run entity. Unocal was ultimately purchased by Chevron.

The deal will also have to pass muster under the Investment Canada Act, which requires takeovers by foreign companies to pass a “net benefit test” to determine whether or not the deal will be of benefit to the Canadian economy. The Act has been used to block takeovers as recently as 2009 when Australia-based BHP Billiton Ltd attempted to purchase Potash Corp for US$ 39 billion.

If the deal goes ahead, it is expected to complete in Q4 of 2012. Kevin Reinhart, Nexen’s CEO said of the deal, “This transaction will allow for significant investment in ou business and opens to door to new opportunities for our employees.”

 

 

 

Edited from various sources by David Bizley

Read the article online at: https://www.oilfieldtechnology.com/drilling-and-production/24072012/cnooc_bids_usd_15_billion_for_nexen/

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