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AP News

Nexen shareholders approve of CNOOC takeover

TORONTO (AP) — Shareholders of Canadian oil and gas producer Nexen Inc. voted Thursday to approve a proposed $15.1 billion takeover of the company by Chinese state-owned CNOOC, but the foreign takeover still requires approval by the Canadian government.

Ninety-nine percent of shareholders voted Thursday to approve the $27.50 per share offer. It would be China's biggest overseas energy acquisition.

The acquisition must be deemed a "net benefit" to Canada and concerns have been raised by Ten Menzies, a ruling Conservative lawmaker in Alberta, who said he has been getting a lot of negative feedback from constituents about the takeover by a state-owned Chinese firm.

Canada's industry minister announced Aug. 29 that he was conducting a review of the proposal under the Investment Canada Act. The review will take 45 days initially from that date, but can be extended by 30 days or more.

Nearly all foreign takeovers are approved in Canada, but Canada's Conservative government did reject Anglo-Australian BHP Billiton's hostile takeover bid for Saskatchewan's Potash Corp. in 2010 and the sale of Vancouver-based MacDonald, Dettwiler and Associates' space-technology division to an American company in 2008. In the case of Potash Corp., the local Saskatchewan provincial government was against the foreign takeover of a company that controls 25 percent of the world's supply of potash.

Canada's Conservative government has allowed Chinese companies to take stakes in energy companies and Prime Minister Stephen Harper has made trade with China a top priority.

Shares of Nexen are trading below CNOOC's offer. Shares traded down five cents to $25.27 in morning trading on the New York Stock Exchange on Thursday.

Nexen's board approved the takeover in July after CNOOC offered a 62 percent premium on the stock price.

Nexen operates in western Canada, the Gulf of Mexico, North Sea, Africa and the Middle East, with its biggest reserves in the Canadian oil sands. It produced an average of 213,000 barrels of oil a day in the second quarter of this year

CNOOC and other big state-owned Chinese energy companies have increased purchases of oil and gas assets in the Americas as part of a global strategy to gain access to resources needed to fuel China's economy. Despite its slowing growth, China's demand for energy is soaring.

The companies have moved more carefully since CNOOC tried seven years ago to buy Unocal but was rejected by U.S. lawmakers citing national security fears.

In an apparent show of commitment to Canada's interests, CNOOC is pledging to set up a regional headquarters in Calgary, Alberta, where Nexen is based. It also says it will keep the Canadian company's management and projects in place and list shares on the Canadian bourse.

The deal had required approval by two-thirds of the votes cast by both Nexen's common and preferred shareholders. The preferred shareholders voted 87 percent to approve the agreement.

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