Sept. 24 (Bloomberg) -- Abu Dhabi National Energy Co., the state-controlled power generator and oil producer, agreed to buy Canada's PrimeWest Energy Trust for about C$4 billion ($4 billion) in the biggest-ever North American takeover by a United Arab Emirates company.

Persian Gulf states, flush with cash from burgeoning oil revenue, are buying overseas assets at a record pace. Calgary- based PrimeWest would be Abu Dhabi National's sixth overseas acquisition since November. The deal would give Abu Dhabi National, also known as Taqa, daily production of oil and gas equivalent to more than 61,000 barrels of oil in Canada and the U.S., the companies said in statement today.

``Taqa is very much fulfilling the Abu Dhabi government's policy of diversifying its assets in other regions of the world,'' said Philipp Lotter, senior analyst at Moody's Investors Service in Dubai with an Aa2 investment-grade rating on the company's debt. ``This deal fits the profile of their recent acquisitions in Canada.''

Taqa will pay about C$26.75 each for PrimeWest's outstanding units and exchangeable shares and will assume about C$1 billion in the income trust's debt, raising the total value of the deal to C$5 billion, PrimeWest spokesman George Kesteven said in a voicemail message. The cash portion represents a 34 percent premium to PrimeWest's closing price on Sept. 21.

Units of PrimeWest rose C$6.37, or 32 percent, to C$26.31 on the Toronto Stock Exchange. Taqa's shares rose 0.7 percent to 2.78 dirhams in Abu Dhabi.

U.S. Reaction

PrimeWest assets include properties in Montana, North Dakota and Wyoming. The deal is unlikely to spark the furor caused by the planned purchase by Dubai World's DP World unit last year of six U.S. port terminals through its acquisition of London-based Peninsular & Oriental Steam Navigation Co., said Eckart Woertz, chief economist at the Gulf Research Center in Dubai.

``Oil clearly is a strategic industry, but after the problems DP World had with P&O, Gulf investors did take heart to see Sabic get clearance to buy GE Plastics in the energy and chemicals sector,'' Woertz said in an interview.

Saudi Basic Industries Corp., or Sabic, the biggest chemicals maker by market value, completed the $11.6 billion purchase of General Electric Co.'s plastic division on Aug. 31.

U.S. Ally

``The U.A.E. is an ally of the U.S.,'' Woertz said. ``The U.S. Navy uses U.A.E. ports, and along with other oil exporters the U.A.E. finances the U.S. deficits.''

Canadian Industry Minister Jim Prentice said the transaction ``will be reviewed, as others would, under the Investment Canada Act.''

``I'm not going to comment specifically about this transaction,'' Prentice said in an interview from Chicago.``I'd simply make the point that the question of governance, the question of transparency, the question of state-owned enterprise working within market principles are certainly issues that can be scrutinized within the context of the Investment Canada process and it will be.''

Taqa Chief Executive Officer Peter Barker-Homek on Aug. 16 said the company may spend $3 billion over the next 12 months to more than double production and reserves from the Canadian oil and gas business it bought from Pogo Producing Co. The acquisition of PrimeWest would give Taqa proved and probable reserves equivalent to 285 million barrels of oil.

`New Opportunities'

Taqa on Aug. 23 agreed to buy Pioneer Natural Resources Co.'s assets in Canada for $540 million and earlier in the month completed its $2 billion acquisition of Pogo's Canadian unit, Northrock Resources Ltd. The Pogo unit has proved reserves equivalent to 142 million barrels of oil.

``Further acquisitions will come, and certainly Canada is an area where we actively are looking for new opportunities to grow the business to get to scale,'' Barker-Homek said on a conference call with reporters. ``So I would hope that we would announce a follow-on transaction in 2008 in Canada.''

The acquisition of PrimeWest would be the biggest one of a Canadian energy trust since the federal government in October 2006 announced it would begin taxing income funds in 2011. Canadian trusts have been consolidating through acquisitions or mergers since that announcement.

PrimeWest in July bought rival Shiningbank Income Trust to cut operating costs and limit its liability from the new tax.

Today's announcement buoyed other trusts. Pengrowth Energy Trust rose 4.4 percent to C$17.98 in Toronto. Canetic Resources Trust, an investor in Canadian oil and gas properties, gained 4.4 percent, to C$14.90.

More Deals Likely

``You'll see more of these types of deals in the future,'' said Peter Schiff, president of Darien, Connecticut-based Euro Pacific Capital, which owns about 700,000 PrimeWest units. ``The cheapest place to get oil and gas right now is these trusts, not to drill for it.''

PrimeWest's units fell 9.4 percent on Nov. 1, the day after the Canadian government announced its tax plans. Before today they fell 7.3 percent this year.

The trust focuses on conventional oil, gas and coalbed methane deposits located mainly in the Western Canadian Sedimentary Basin.

The transaction is expected to be completed before the end of November. CIBC World Markets Inc. advised PrimeWest, and TD Securities Inc. advised Taqa.

(For a replay of the companies' conference call, dial +1-800-558-5253, reservation number 21350676. In the Toronto area, dial +416-626-4100.)

To contact the reporter on this story: Sonja Franklin in Calgary at sfranklin6@bloomberg.netWill McSheehy in Dubai, U.A.E., at wmcsheehy@bloomberg.net.

Last Updated: September 24, 2007 16:36 EDT