Canada Stocks Fall on Rejected Progress Energy Bid; Nexen Drops
Stock Chart for Progress Energy Resources Corp (PRQ)
Canadian stocks fell after the government blocked Petroliam Nasional Bhd.’s C$5.2 billion ($5.23 billion) takeover of Progress Energy (PRQ) Resources Corp., casting doubts on Cnooc Ltd.’s bid for Nexen Inc. (NXY)
Energy companies fell the most among 10 industry groups, sinking 1.2 percent, as Progress Energy and Nexen slumped more than 5.1 percent. Gold companies gained as a rebound in the metal’s price helped send Barrick Gold Corp. (ABX) up 1.4 percent.
The Standard & Poor’s/TSX Composite Index (SPTSX) lost 39.63 points, or 0.3 percent, to 12,376.35 at 11:36 a.m. in Toronto. The benchmark gauge is up 0.5 percent in October, poised for the fifth consecutive month of gains, the longest streak since February 2011.
“The government objection has caused concern across the board in the oil and gas patch,” Robert McWhirter, portfolio manager with Selective Asset Management Inc. in Toronto, said in a phone interview. His firm manages about C$60 million. “People are having second thoughts as to whether those other specific acquisitions might go ahead,” he said. Gold “is what appears to be the only visible ray of sunshine in the background at this moment.”
Progress Energy slumped 11 percent to C$19.26. Industry Minister Christian Paradis said in a statement that he wasn’t satisfied the acquisition by Petroliam Nasional, Malaysia’s state oil company known as Petronas, is in Canada’s interest. Prime Minister Stephen Harper’s Conservative government reviewed the bid under its foreign takeover law, which says transactions must be judged to have a “net benefit” to Canada.
Investors say the rejection is a test case for the $15.1 billion bid by Cnooc of China for Nexen. Shares of the Calgary- based oil and natural gas producer dropped 5.1 percent to C$23.87.
Encana Corp. (ECA), Canada’s largest natural gas producer that was touted as a takeover target for Exxon Mobil Corp., slipped 3.9 percent to C$22.86. Encana is a natural fit for the largest U.S. energy company, Kevin Kaiser, energy analyst at Hedgeye Risk Management, an independent investment research firm based in New Haven, Connecticut, said last week.
Gold producers gained as the metal’s prices rebounded from a six-week low. Barrick, the world’s largest gold producer, advanced 1 percent to C$38.94. Goldcorp Inc. (G) added 0.4 percent to C$43.23.
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