WRAPUP 1-Petronas, Progress not giving up after Ottawa balks

Mon Oct 22, 2012 11:48am EDT
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* Petronas, Progress extend deal deadline

* Shares fall after surprise rejection of takeover

* Malaysian energy minister won't give away next move

By Jeffrey Jones and Euan Rocha

CALGARY/TORONTO, Oct 22 (Reuters) - Progress Energy Resources Corp and Petronas said they will meet with Canadian officials to try to reverse the government's surprise decision late on Friday to block their $5.2 billion merger deal.

Petronas, the Malaysian state oil company, agreed on Monday to extend its deadline to close the acquisition of Progress, which has extensive exploration lands in the gas-rich Montney shale region of British Columbia, by up to 90 days.

Canadian Industry Minister Christian Paradis said late on Friday that Petronas' friendly bid would not provide the "net benefit" the government seeks under foreign investment laws - a decision that shocked investors as the deal been expected to pass muster easily.

Progress shares tumbled 11.2 percent to C$19.21 in morning trading on the Toronto stock exchange, and other energy shares also fell as the veto prompted discussion about whether Canada, which needs hundreds of billions of dollars to develop its energy patch, was really open for foreign business as it frequently insists.

Shares of Nexen Inc fell 5.2 percent to C$23.84 on concerns about its proposed $15.1 billion takeover by China's CNOOC.   Continued...