Despite Canadian Government approval of the $15.1bn takeover of Nexen, the deal is “nowhere near done” according to company officials.
Steven Harper’s government has approved the controversial takeover of Canadian oil producer Nexen by China National Offshore Oil Corp (CNOOC). However, according to Nexen’s interim chief executive Kevin Reinhart, the $15.1 billion deal is “nowhere near done.”
Nexen and CNOOC have issued a joint statement claiming the deal is still contingent on “the receipt of other applicable government and regulatory approvals”, although exact details on what still remains to be finalised have not been forthcoming.
Discussions are in progress with the US Committee on Foreign Investment, although treasury secretary Tim Geithner, who chairs the committee, would not comment on the timing of its approval. Britain has already agreed it would “not stand in the way” of the takeover, which could have a significant impact on Brent crude pricing.
The record takeover bid pushed shares of the Canadian oil sands company up 20% to $26.60 in the three days after the government gave its approval. However, CNOOC’s analyst ratings have sunk to their lowest level in three years. Shi Yan, an analyst at UOB-Kay Hian in Shanghai, sees the acquisition as “adding assets at a very high cost.” “Unless you are the Chinese government”, remarks Shi, “I don’t see why investors should be excited about the deal.”
CNOOC, under pressure from energy-hungry Beijing, was reported to have accepted almost all clauses and stipulations laid down by Nexen, as part of China’s aggressive strategy to guarantee its future oil reserves.