Christmas has arrived early for China and Malaysia. On Friday, Canadian regulators approved the proposed $18bn acquisition of Toronto-listed Nexen, a global oil and gas company, by China’s Cnooc, a state-owned oil group.
Concurrently, the government also reversed an earlier plan to block the $5.2bn bid for Progress Energy Resources, another Calgary-based oil and gas company, by Petronas of Malaysia.
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For Chinese resources companies, Canada has long seemed like the promised land. Brimming with oil, timber and minerals, it also appeared more open to Chinese investment and less prone to resource nationalism than its neighbour, the US.
Or so it seemed until last weekend, when Ottawa rejected a $5bn bid from Petronas, the Malaysian state-owned oil company, to acquire Canadian company Progress Energy, sending a shockwave through the Chinese dealmaking community. A $15bn bid by Cnooc for oil group Nexen has been approved by the shareholders of both companies but awaits the OK from Canadian regulators. If Ottawa could turn Petronas away, it could shun Cnooc, too.
By Simon Flowers of Wood Mackenzie
Cnooc Limited’s definitive agreement to acquire Nexen for $18.5bn marks a bold counter-cyclical move in what has been a relatively inactive market in 2012. It may also signal a new phase of Chinese national oil companies-led M&A following a lack of recent high-profile deals.