CNOOC-Nexen review likely to be extended again: sources

Wed Oct 31, 2012 5:07pm EDT
 
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By Randall Palmer

OTTAWA (Reuters) - Canada is likely to extend its review of the $15.1 billion bid by China's CNOOC Ltd (0883.HK: Quote) for oil producer Nexen Inc NXY.TO beyond next week's deadline to allow more time for the government to formulate a broad framework on foreign investment, two sources close to the matter said on Wednesday.

The sources said there was too little time before the November 10 deadline for the federal government to conclude deliberations on the Nexen deal as well as prepare a framework to clarify its overall policy on foreign deals.

Ottawa has promised to announce such a framework at the time it makes its ruling on the Nexen proposal. As a consequence, the sources said, the government would likely seek to extend the review period for a second time.

Under Canadian law, all major foreign takeover proposals are subject approval of the federal government, which must certify that the deals benefit the country.

The sources, who spoke on the condition of anonymity due to the sensitivity of the issue, stressed that the delay was not a signal that the bid was necessarily in trouble.

That said, any delay would increase the carrying cost of those who are holding Nexen shares in the hope of approval.

The timing is complicated by Prime Minister Stephen Harper's plans to travel to Asia from November 3. Harper, who has been closely involved in the discussions on the framework, is not scheduled to be back in Ottawa until November 11, after the current Nexen deadline.

The government has extended the standard 45-day review period by 30 days. That extension expires on November 10, but because that date falls on a Saturday, when government offices are closed, the effective deadline is November 9.   Continued...

 
The Nexen building is seen in downtown Calgary, Alberta, July 23, 2012. REUTERS/Todd Korol