CNOOC/Nexen Deal Still Waiting for Government Approval

The takeover by Canada’s Nexen Inc. by Chinese firm CNOOC is going to take a bit longer to receive approval from the Canadian government. The government extended its review bid by 30 days, giving it more time to consider the merits of CNOOC Ltd's controversial proposal. 

Under the Investment Canada Act, the government is required to examine all deals worth more than C$330 million to determine if they will bring a 'net benefit' to the country. The act provides for an initial 45-day review period, which can be extended by an additional 30 days. In some cases reviews can be extended further.

 “The proposed transaction is undergoing a rigorous review under the Investment Canada Act,” said Christian Paradis, Canada's industry minister, in a brief statement regarding the extension. “The required time will be taken to conduct a thorough and careful review of this proposed investment.”

The extension was not unexpected as many fear a successful takeover of Nexen by the Chinese firm could ignite a run on foreign companies taking over Canadian energy producers.

CNOOC's proposal is the largest takeover attempt by a Chinese firm, on a price per share basis.