12:37 p.m. | Updated
The great energy rush continues.
On Monday, Cnooc, the Chinese state-run oil giant, agreed to buy Nexen of Canada for $15 billion, as global players look to beef up their access to natural resources.
Under the terms of the deal, Cnooc will pay $27.50 a share for the Canadian oil and natural gas company. The price is 61 percent above Nexen’s closing price on Friday.
Related Links
Documents: The news releaseCnooc has also offered to buy Nexen’s preferred shares for about $25.58 each, as well as accrued dividends, pending approval by that class of investors.
Companies around the world have been scrambling to build up their holdings in so-called unconventional resources, which include the gas-rich hard rock formations that underpin today’s drilling boom. (Separately, Sinopec, another Chinese oil company, announced on Monday that it has purchased a 49 percent stake in Talisman Energy‘s holdings in the North Sea for $1.5 billion.)
Among Nexen’s properties are parts of the oil sands in Canada’s Alberta province.
Through the acquisition, Cnooc will also gain valuable footholds in oil- and gas-producing areas around the world, including western Canada, the North Sea, the Gulf of Mexico and the waters off Nigeria.
“This is an exciting opportunity for us to build on our existing joint venture relationship with Nexen in Canada, and to acquire a leading international platform in the process,” Wang Yilin, the chairman of Cnooc, said in a statement.
The Canadian industry minister and the country’s competition watchdog said on Monday that they will review the deal.
The deal is one of the biggest overseas expansion efforts by a Chinese company to date. Cnooc was behind one of the biggest efforts when it sought to buy Unocal, an American oil company, only to be blocked by national security concerns.
The unease over major Chinese companies buying up valuable assets like natural resources has since lingered, helping to dissuade many of these entities from making bids for assets. Nearly two years ago, Sinochem, a Chinese chemicals maker, considered but decided against a bid for the Potash Corporation of Saskatchewan, deciding that it could not ease nationalist concerns in Canada.
This time around, Cnooc appears to be aiming to defuse protectionist sentiment. Much of its statement describes the deal’s benefits for Canada, noting that Cnooc has already invested 2.8 billion Canadian dollars in the country.
Cnooc said it would establish Calgary as the head of its North American and Central American operations, and would retain Nexen’s existing management team. The Chinese company also said it would list its shares on the Toronto Stock Exchange and promised to support research in Alberta.
It has also sought to allay concerns in other countries, including the United States and Britain.
Under provisions of Monday’s deal, while Nexen cannot actively look for higher bids, it can consider any that other companies make on their own. Cnooc has the right to match any such proposal.
If directors of Nexen withdraw their recommendation, the company must pay Cnooc a $425 million breakup fee. But if the deal falls apart because of Chinese regulatory reasons, Cnooc must pay $425 million.
Cnooc was advised by BMO Capital Markets, Citigroup and the law firms Stikeman Elliott and Davis Polk Wardwell.
Nexen was advised by Goldman Sachs, RBC Capital Markets and the law firms Blake, Cassels Graydon and Paul, Weiss, Rifkind, Wharton Garrison. Its board was counseled by the Richard A. Shaw Professional Corporation and Burnet, Duckworth Palmer.
Article source: http://dealbook.nytimes.com/2012/07/23/cnooc-to-buy-nexen-for-15-billion/?partner=rss&emc=rss
Speak Your Mind
You must be logged in to post a comment.