CNOOC in a $15 Billion Nexen Bid

Chinese firm CNOOC Ltd. has launched a takeover bid for Canada’s Nexen Inc. If the deal goes through it will be the largest acquisition the firm has made to date. CNOOC has offered $15.1 billion for the Canadian firm. 

 

The company is hoping that the 61% premium on Nexen’s share price will be enough of a carrot to sway shareholders and the Canadian government. CNOOC has promised to retain all employees and to make Canada home base for its Western Hemisphere operations.

 

The $15.1 billion offer prices Nexen’s shares at $27.50 per share. For this money the Chinese firm will gain Nexen’s oil sands operations in the Canadian province of Alberta, shale gas in the province of British Columbia and extensive exploration and production holdings in the North Sea, Gulf of Mexico, and offshore West Africa.

 

While shareholders have taken to the deal enthusiastically, sending Nexen shares soaring up 52% on July 23 to C$26.35 per share, the deal could face a lengthy approval process. Besides the needed approval of two-thirds of Nexen’s shareholders, there are many more steps to be taken which could take up to nine months to complete.

 

The sale must be cleared by securities regulators and courts at the federal level in Canada and due to Nexen’s international operations it also must get the green light from regulators in the US, UK, and possibly the EU.