Nexen takeover deal approved
Dec 8, 2012 / 8:00 am
OTTAWA - Prime Minister Stephen Harper ended months of market uncertainty by approving the foreign takeovers of Calgary-based Nexen Inc. and Progress Energy Resources Corp. - but insisted future appropriations by state-owned firms in the oilsands would become the exception rather than rule.
China's CNOOC and Malaysia's Petronas, both Asian state-controlled enterprises, received the OK late Friday as part of a wide-ranging update of foreign-takeover rules.
In future, all state-owned enterprises seeking to buy large Canadian companies will face greater scrutiny about how they operate and how much control their home governments would have over how they do business.
Harper said foreign-state control of oilsands development in particular has reached the point where further control would not be beneficial to Canada.
"When we say that Canada is open for business, we do not mean that Canada is for sale to foreign governments," Harper said at a hastily called news conference.
"The government's concern and discomfort for some time has been that very quickly, a series of large-scale controlling transactions by foreign state-owned companies could rapidly transform this (oilsands) industry from one that is essentially a free market to one that is effectively under control of a foreign government."
Harper noted that just 15 companies operate in the oilsands, exposing the industry to greater risk of foreign control after only one or two transactions.
The China National Offshore Oil Co., or CNOOC, launched a friendly $15.1-billion bid for Nexen and its Long Lake oilsands project in July, providing a series of guarantees to the Canadian government on job creation, head office location and corporate governance.
In a statement, Industry Minister Christian Paradis said he was satisfied that the deal would be a net benefit to Canada.
Initially, Malaysia's Petronas $6-billion bid for Progress Energy, which is developing natural-gas lands in northeastern B.C., was rejected by the federal government and the company later revised its proposal.
Paradis said the company made "significant commitments" in several areas that satisfied him the deal was a net benefit to Canada.
In revising the guidelines for state-owned enterprises, the Conservatives answered complaints the rules were too vague to provide certainty for investors.
At the same time, they responded to Canadians' concerns about the implications of allowing foreign-owned firms to play a major role in Canada's natural resources sector.
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