CNOOC-Nexen deal wins U.S. approval, its last hurdle2/12/2013
(Reuters) - U.S. regulators have approved the $15.1 billion takeover of Canadian oil and gas company Nexen Inc by China's state-owned CNOOC Ltd, removing the final obstacle to the Asian country's largest-ever foreign takeover.
Calgary, Alberta-based Nexen said on Tuesday the Committee on Foreign Investment in the United States (CFIUS) had given the final green light. It said it now expects the deal to close the week of February 25, seven months after China's top offshore oil and gas producer made its bid of $27.50 a share.
Nexen's shares climbed to just below the bid price soon after North American markets opened, rising 2.1 percent to $27.43 on the New York Stock Exchange. It was the highest price the shares had hit since CNOOC made its bid for Nexen on July 23 last year.
The approval came even though widespread distrust of U.S. investments by Chinese companies has lingered among some legislators since CNOOC's 2005 attempt to buy Unocal Corp, a deal that foundered on U.S. national security concerns.
CNOOC's success in navigating the CFIUS approval process "is likely to be viewed as a positive development," said Joshua Zive, senior counsel at Bracewell and Guiliani, a Washington law and lobbying firm. "That, in the current climate, is a moment of significance."
Late last month, CFIUS cleared a bid by the U.S. unit of China's Wanxiang Group to buy A123 Systems Inc, a maker of electric car batteries. The approval came despite warnings by some lawmakers that the deal would lead to the transfer of sensitive technology developed with U.S. government funding.
The Nexen acquisition gives CNOOC new offshore production in the North Sea, the Gulf of Mexico and off western Africa, as well as producing properties in the Middle East and Canada.
In Canada, CNOOC gains control of Nexen's Long Lake oil sands project in the oil-rich province of Alberta and billions of barrels of reserves in the world's third-largest crude storehouse.
Canada approved the contentious takeover late last year even though some members of the governing Conservative Party had misgivings because of concern about China's human rights record.
At the same time, the federal government insisted that CNOOC-Nexen was the last deal of its kind that it would approve, drawing a line in the sand against state-controlled companies taking majority stakes in Alberta's strategic oil sands.
U.S. approvals, made necessary because of Nexen's Gulf of Mexico holdings, took longer as legislators examined whether the deal would threaten U.S. national security.
The United States has traditionally been more wary than Canada of Chinese investment, prompting some speculation that Washington might want Nexen to dispose of the U.S. assets.
Nexen did not indicate in its statement whether CFIUS had imposed conditions on the approval, and the company was not immediately available for comment.
Nexen released the news on a day when Washington was focused on President Barack Obama's State of the Union address, a nuclear test by North Korea, and deliberations in the key Senate Armed Service Committee about a vote on Obama's pick for Secretary of Defense. In China, lunar New Year celebrations were in full swing.