Cnooc Said to Probably Accept Canada Nexen Bid Extension

Cnooc Ltd. (883) anticipates the Canadian government will seek an extension on its review of the Chinese company’s $15.1 billion proposed takeover of Nexen Inc. (NXY), said a person familiar with the Chinese company’s plans.

The government already extended its review of the deal by 30 days on Oct. 11, and Beijing-based Cnooc must agree to further delays under Canada’s foreign investment review law. Cnooc would probably accept another extension, said the person, who spoke on condition of anonymity because the negotiations are confidential.

China, the world’s second-biggest economy, is seeking greater access to Canada’s oil sands, the world’s third-largest pool of reserves, to support growth. Canadian Prime Minister Stephen Harper has said that the government will release new guidelines for how it judges foreign takeovers when it announces the decision on Cnooc-Nexen. (NXY)

While Harper has said selling more of the nation’s natural resources to Asia is a “national priority,” and that his government welcomes foreign investment, he also said earlier this month the Cnooc offer for Calgary-based Nexen raises a “range of difficult policy questions.” Canada reviews any foreign takeover worth more than C$330 million ($330 million) to ensure the sale provides a net benefit to the country.

Industry Minister Christian Paradis issued a statement Oct. 19 saying he wasn’t satisfied that Petroliam Nasional Bhd.’s acquisition of Calgary-based Progress Energy Resources Corp. (PRQ) was in the country’s national interest. Petronas, as Malaysia’s state-owned oil company is known, had agreed Oct. 5 to extend the deadline review until Oct. 19. Petronas and Progress have another 30 days to revise the C$5.2 billion deal in a bid to win government approval.

Deal Completed

Paradis declined to comment today on whether the government will ask for another extension of the Cnooc-Nexen review. Nexen spokeswoman Patti Lewis and Cnooc spokesman Peter Hunt weren’t immediately available to comment.

Cnooc expects the Nexen deal, China’s largest foreign takeover, to be completed within the year, Chief Financial Officer Zhong Hua said on a conference call last week.

Nexen rose 2.1 percent to $23.90 at 4 p.m. in New York, 13 percent below the $27.50 Cnooc offer price. Progress advanced 1.2 percent in Toronto to C$20.12, trailing the C$22-a-share bid from Petronas.

To contact the reporter on this story: Andrew Mayeda in Ottawa at amayeda@bloomberg.net

To contact the editor responsible for this story: Chris Wellisz at cwellisz@bloomberg.net

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