HONG KONG/CALGARY – State-controlled CNOOC Ltd launched one of China’s richest takeover bids yet Monday by agreeing to buy Canadian oil producer Nexen Inc. for $15.1 billion, forcing Ottawa to decide whether national 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 by offering a hefty 61 percent premium to Nexen’s Friday stock price, pledging to retain all employees and promising 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 move is the most ambitious foray by resource-hungry China into North American energy since a 2005 attempt to buy US-based Unocal for $18.5 billion was thwarted by a political backlash there.
"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."
CNOOC has only nine years worth of reserves based on its current production - one of the lowest ratios among major oil companies worldwide - and said the deal would increase its proven reserves by 30 percent.
"CNOOC has been seeking overseas acquisitions, as the domestic reserves are limited. But there has been many limits, things like foreign companies (being) reluctant to sell, price too high. This deal would be quite a success," said Yan Shi, an o il analyst at brokerage UOB Kay Hian in Shanghai. – Reuters