OTTAWA (Reuters) - Dominion Bond Rating Service delivered a mixed verdict on Wednesday on whether the $15.1 billion bid by China’s CNOOC Ltd (0883.HK) for Canadian oil firm Nexen Inc NXY.TO would be of net benefit to Canada.
Canadian law requires the federal government to decide if such foreign takeovers are of net benefit to the country, a question that has prompted robust debate within the Conservative government and caucus in the case of the CNOOC bid.
The Toronto-based rating agency said the deal would have a mixed to slightly negative economic impact, but a positive political impact as it would dramatically improve relations with China, which could then boost trade.
On the financial side, it said: “This transaction is not necessary, as Nexen remains a strong operator with good access to capital markets.”
DBRS also cited a poor track record of corporate acquisitions in Canada in general, and said approval of the CNOOC bid risked diluting domestic ownership in other leading energy firms.
However, it said the inflow of capital could act as a catalyst for speeding up oil sands development and other energy initiatives. The deal could also accelerate future access to Asian markets.
Reporting by Randall Palmer; Editing by Jeffrey Hodgson