Nexen, Progress rally after Canada clears foreign takeovers

Mon Dec 10, 2012 10:57am EST
 

By Claire Sibonney

TORONTO (Reuters) - Shares of Canadian takeover targets Nexen Inc NXY.TO and Progress Energy Resources Corp PRQ.TO jumped on Monday after the Canadian government approved the two controversial bids for the oil companies by state-owned enterprises.

Nexen was up 14.3 percent to C$26.61 on Canada's green light for China's biggest foreign takeover, the $15.1 billion acquisition by CNOOC Ltd (0883.HK: Quote). Progress Energy climbed 13.4 percent to C$21.96 on the go-ahead for the $5.3 billion takeover by Malaysia's Petronas PETR.UL.

But some smaller oil sands plays were hurt after Canada announced new rules limiting future acquisitions by foreign state-owned enterprises. Meg Energy Corp MEG.TO and Athabasca Oil Corp (ATH.TO: Quote) both fell 3 percent in early trading and were two of the biggest weights on the broader Toronto market.

The mixed market reaction to Canada's ruling follows months of heated debate about how much of Canada's energy sector could and should be absorbed by companies run by other nations.

The greater clarity on foreign investment rules could buoy stocks of companies seen as likely takeover targets.

However, some analysts cautioned that by drawing a line in the sand against future acquisitions by foreign state-owned enterprises, the Canadian government could be seen as raising hurdles for takeovers in general.

(Additional reporting by Solarina Ho; Editing by Sofina Mirza-Reid)

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