The federal government has approved the takeovers of
- Progress Energy by Malaysian national oil company Petronas
- Nexen by Chinese national oil company CNOOC.
Industry Minister Christian Paradis said CNOOC and Petronas have made “significant commitments to Canada” concerning corporate governance — including transparency and disclosure — as well as adherence to Canadian laws, practices and free-market principles.
Those commitments also extend to employment and capital investments, “which demonstrate a long-term commitment to the development of the Canadian economy,” he said.
Yes the transactions were approved but according to the prime minister:
“Going forward, the Minister will find the acquisition of control of a Canadian oil-sands business by a foreign state-owned enterprise to be of net benefit, only in an exceptional circumstance,”
The PM was blunt about Canada being open for business but not for sale to foreign governments!
No matter what you’re feeling right now towards these takeovers by foreign national companies, there are 2 facts we cannot ignore:
- The shareholders of Nexen and Progress are pretty happy having realized a decent gain.
- The foreigners will be back for more since the whole sector is severely undervalued (just look at the takeover metrics). If they can’t outright buy a whole company, they will throw money on JV agreements, tons of it.
The positive side of these takeovers is the patch will be injected with much needed development capital.
The sector might see some buying interest on Monday particularly in E&P companies with a decent Montney acreage (hello PPY!.) However, I believe the market will quickly revert back to focus on the ongoing fiscal cliff discussions…
What do YOU think of these takeovers?
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