OTTAWA (Reuters) - Canada said on Wednesday it would decide soon on two big foreign takeover bids for domestic energy companies, despite possible delays in approval by U.S. regulatory authorities.
“We intend obviously to take decisions on a couple of particular matters along with some more general guidance to the marketplace. We intend to do that in the near future and that’s all I’ll say about that,” Prime Minister Stephen Harper said.
Harper has previously spoken about deciding in the “not-too-distant future”, the “very near future” and “very soon”.
Harper’s government is studying a $15.1 billion proposal by China’s CNOOC Ltd (0883.HK) to buy Nexen Inc NXY.TO NXY.N and a C$5.2 billion ($5.3 billion) bid by Malaysia’s Petronas PETR.UL for Progress Energy Resources Corp (PRQ.TO).
Nexen’s share price has been under pressure because of concern that a CNOOC-Nexen announcement on Tuesday that they had pulled their application for U.S. approval and then refiled it might mean a longer wait before the deal can be consummated.
Canadian Industry Minister Christian Paradis declined to answer when asked if the new review, under the Committee on Foreign Investment in the United States (CFIUS), would mean Canada would delay its own approval process.
But Harper’s subsequent remarks to reporters suggested that Ottawa was not planning to push back its timetable, and that the decisions on CNOOC and Petronas would come at the same time as an overall framework on foreign investment.
Pundits have assumed that all three decisions will come by the December 10 deadline for deciding on whether to allow the CNOOC bid, although technically the government can extend that deadline if CNOOC and Nexen agree.
Canada is trying to balance the need for foreign investment to develop its natural resources with concern that China might take over large chunks of the energy patch and that government-owned firms will not play by free-market rules. Both CNOOC and Petronas are state-owned.
The market was not totally sure what to make of the CNOOC/Nexen move to pull and refile their application to CFIUS, but analysts noted that the news release did not refer to closing the deal by end-year but spoke merely of “completing the CFIUS review process as expeditiously as possible.”
The possible delay stems from the fact that the resubmission restarts the clock, which allows in theory up to another 75 days for the United States to decide.
However, the first words of the release stated that the resubmission was “by mutual agreement” with CFIUS, and one source close to the deal said: “This is considered routine.”
One investor, who asked not to be identified because of the sensitivity of the negotiations, said he understood that at least one U.S. concern was about who could work on Nexen-linked oil rigs in the Gulf of Mexico that are near U.S. military traffic.
“I don’t think the U.S. CFIUS issues are nearly as important or as sensitive (as the Canadian concerns),” he said.
Nexen closed 0.9 percent lower in New York at $23.98, well below CNOOC’s $27.50 offer. Progress ended up 1.5 percent at C$20.01, closer to the C$22 Petronas offer price.
The relative premium on Progress shares may reflect the view that a Malaysian firm is less of a concern than one from China, that it submitted a revised bid after discussions with Canadian officials and concerns over the length of the U.S. process for approving the CNOOC deal.
Additional reporting by David Ljunggren; Editing by Janet Guttsman and M.D. Golan