Cnooc-Nexen deal ‘moving along’ as Canada develops policy

Cnooc Ltd. (883)’s $15.1 billion bid for Canada’s Nexen Inc. is “moving along” as the federal government develops new foreign-investment guidelines while it reviews the bid from the Chinese oil producer, Alberta Premier Alison Redford said yesterday.

“I haven’t heard anything,” Redford said. “This is a decision the federal government will make. We understand that it’s moving along and everything is being considered.”

Redford, whose province includes Nexen’s Calgary headquarters, spoke to reporters in Toronto yesterday after a speech at an infrastructure investment conference.

The Cnooc-Nexen deal is “an important investment for Alberta and for Canada,” she said. “We respect the fact that the federal government is thinking through what that long-term approach should be with respect to policy which I think is good for Canadians.”

The Canadian government is reviewing the sale of Nexen under its foreign-takeover law, which specifies transactions need to have a “net benefit” to the country in order to win approval. Canada extended its review of the deal for a second time on Nov. 2, setting the deadline to Dec. 10.

Canadian Industry Minister Christian Paradis said his government is working on a legal framework, including “new provisions,” for foreign investments, declining to speculate on decisions regarding deals under review.

“There is a current legal framework in place and we are reviewing with this legal framework and as I said when we are ready to announce a policy framework that we’ve been working on, we’ll do it appropriately,” Paradis told reporters in Ottawa yesterday.

U.S. Review

Cnooc and Nexen withdrew and resubmitted a notice on the deal for review by the Committee on Foreign Investment in the United States, Nexen said in a statement on its website after the close of North American markets without providing a reason. Nexen spokesman Pierre Alvarez didn’t immediately return a phone message seeking comment.

The committee, known as CFIUS, assesses foreign takeovers of U.S. companies on national security grounds. Nexen’s U.S. unit operates in the U.S. portion of the Gulf of Mexico.

Cnooc shares declined 2.2 percent to HK$16.06 as of 9:46 a.m. Hong Kong time. Nexen fell 2 percent to close at C$24.10 ($24.24) in Toronto yesterday, while Cnooc’s American depository receipts dropped 1 percent to $209.67.

A Beijing-based Cnooc spokeswoman didn’t answer two calls to her office seeking comment. An e-mail inquiry to the spokeswoman wasn’t immediately returned.

Market sensitivity to the deal is driving speculation about the U.S. review, Sachin Shah, a special situations and merger arbitrage strategist at Tullett Prebon Americas Corp. in Jersey City, said in a note earlier in the day.