Cnooc Ltd. (883) has made a formal application for government approval of its $15.1 billion bid to purchase Nexen Inc. (NXY), Industry Minister Christian Paradis said.
“I can now confirm that Cnooc has filed an application for review of its proposed acquisition of Nexen under the Investment Canada Act and I am conducting a review of the proposed investment,” Paradis said in a e-mailed statement.
The timing of the application, more than a month after the offer was announced, means investors may have to wait until November or longer for a decision. Shares (NXY:US) of Calgary-based Nexen have remained below the $27.50 price in Cnooc’s bid as investors weigh the chances of approval. They were little changed at $25.43 at 11:42 a.m in New York.
The government has 45 days to review foreign takeovers once an application has been filed, and can extend the deadline by 30 days if it notifies Cnooc before the initial period expires. Canadian officials can further extend the review if both Cnooc and Paradis agree.
“Our government will take the time we have to properly scrutinize this transaction and to assess that, if it is to go ahead, that it will only go ahead if it is in the long-term interests of the Canadian economy,” Prime Minister Stephen Harper said Aug. 23.
If the government takes the full 75 days available at its discretion, the review would be completed by mid-November.
Canadian law calls on the government to review foreign takeovers with asset values greater than C$330 million ($334 million) to ensure they represent a “net benefit” to the nation. Harper said the takeover would have “significant implications for the Canadian economy” and must be judged to be in the country’s long-term interests.
Harper’s Conservative government rejected Melbourne-based BHP Billiton Ltd. (BHP)’s $40 billion hostile takeover bid for Potash Corp. of Saskatchewan Inc. in 2010, only the second such rejection in 25 years, after Conservative lawmakers raised objections.
Nexen’s assets (NXY:US) include the Long Lake oil sands operations in Alberta, offshore oil production in Nigeria and the U.K. North Sea as well as the Gulf of Mexico. Those assets produced 207,000 barrels a day in the second quarter, which would boost Cnooc’s output by about 20 percent.
In its July 23 announcement, Cnooc promised to keep Nexen employees, keep a North American headquarters in Calgary, maintain Nexen’s planned capital spending and list its shares on the Toronto Stock Exchange.
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