Nexen takeover review extended by 1 month
State-owned Chinese oil firm CNOOC's $15-billion bid needs government approval
Industry Minister Christian Paradis has extended the federal government's review of China National Offshore Oil Corp.'s proposed takeover of Nexen Inc. under the Investment Canada Act by 30 days.
CNOOC, one of three Chinese oil companies controlled by the Chinese government, is trying to buy Calgary-based Nexen in a $15-billion takeover.
Shareholders have already signed off on the deal, but any deal worth more than $331 million to take over a Canadian company requires regulatory approval from the Canadian government.
'The review period may be extended again' —Industry Minister Christian Paradis
"Extensions to the review period are not unusual," Paradis said. "In general terms, the Act provides an initial 45 days for the review, which can be extended for an additional 30 days."
"The review period may be extended again, with the consent of the investor. A decision can be made at any time within this period," he said.
Under the terms of the act, the transaction must be assessed on six factors, including whether or not it is of "net benefit" to Canada. That clause was most recently invoked with BHP Billiton's $40 billion offer to buy PotashCorp. in 2010, which Ottawa nixed.
The proposed Nexen takeover has sparked concern across Canada, with Prime Minister Stephen Harper having said it "raises a range of difficult policy questions."
Opponents to deal
The NDP is opposed to the deal, citing national security and environmental concerns in urging Ottawa block the transaction.
"There are still many unanswered questions and it's the Conservatives' job to respond to these questions before selling our resources to the highest bidder," the party's natural resources critic Peter Julian said in a statement Thursday.
"I would hope that the Industry Minister uses these additional days to consult with experts, business people and workers who are concerned about the impacts of this transaction," the NDP industry critic Hélène LeBlanc added.
On Wednesday, former Bank of Canada governor David Dodge came out in favour of the deal. "They are willing to pay, way overpay, how can that not be in our interest," Bloomberg quoted the former central banker as saying.
Dodge suggested that opposition to the transaction is "more anti-Chinese than it is anything else because there is every reason to allow this one."
Nexen also owns assets in the Gulf of Mexico, and the move likely pushes the decision on Nexen beyond the U.S. presidential election in early November.