About 99 percent of Nexen Inc. (NYSE:NXY) shareholders have approved the $15.1 billion takeover bid by CNOOC Limited (ADR) (NYSE:CEO), China’s largest oil explorer. Nexen’s takeover will be the biggest foreign acquisition by a Chinese firm. Barry Jackson, the non-executive chairman of the Calgary-based company, said that CNOOC offered to pay $27.50 per share on July 23, a 66 percent premium over the company’s share prices back then.
However, the deal is yet to be approved by the Canadian government. The country has a “net benefit” rule that allows the government to review all foreign deals worth above C$330 million, to make sure that the acquisition will prove beneficial for Canadian economy.
“Today’s shareholder vote is one step in the transaction’s approval process,” said Kevin Reinhart, Nexen’s chief executive. “It’s now in the [regulators’] hands to assess the transaction.”
Prime Minister Stephen Harper said on August 29 that the government has received CNOOC Limited (ADR) (NYSE:CEO)’s application to acquire Nexen. According to the laws, the government has 45 days to evaluate the application, and the deadline can further be extended by 30 days. Canada has earlier rejected a $40 billion offer by BHP Billiton Limited (ADR) (NYSE:BHP) for Potash Corp./Saskatchewan Inc. (TSE:POT). in 2010. However, analysts believe that there is “little risk” of government blocking the CNOOC Limited (ADR) (NYSE:CEO) deal. However, USA is trying to block the deal due to irregularities.
Nexen Inc. (NYSE:NXY) produces crude oil from Alberta-based Long Lake oil-sands proect. It also has many projects in the Gulf of Mexico, the U.K. North Sea, and several offshore projects in Nigeria.
Before the offer, on July 23rd, the Calgary-based oil producer had rejected two offers from CNOOC. Nexen Inc. (NYSE:NXY) has expected to produce 72,000 barrels per day from the Long Lake oil sands project, but this $6 billion asset never met that target.
CNOOC already has 35 percent stake in Long Lake, which it gained last November, by purchasing Opti Canada Ltd. for $2.1 billion.
The Chinese oil explorer has promised Nexen Inc. (NYSE:NXY) that it will retain all the current 3,000 employees of Nexen, and will trade on Toronto Stock Exchange.
NEXEN INC SAYS THE ARRANGEMENT WAS APPROVED BY APPROXIMATELY 87% OF THE VOTES CAST BY NEXEN PREFERRED SHAREHOLDERS