CNOOC takeover shouldn’t proceed without legislative conditions set by Harper government, says CEOs.
October 1, 2012
by PLANT STAFF with files from The Canadian Press
TORONTO—Canadian CEOs say a proposed acquisition of energy firm Nexen Inc. by China’s CNOOC shouldn’t be allowed to proceed without conditions set by the Canadian government, according to a new report by the Business News Network (BNN).
Nexen shareholders approved the $15.1 billion takeover in late September, but it still needs approval from the Canadian government and has to pass a “net benefit” test.
The BNN survey found that 50% of Canadian executives say the Harper government needs to step in, and that they’d be more supportive of a takeover by a US firm—even more so if Nexen was acquired by a Canadian company.
Forty-two per cent say the CNOOC acquisition should proceed without regulatory intervention.
In a report last week by the DBRS debt-rating agency, the net benefit of the Nexen acquisition is somewhat mixed because the deal offers only limited direct financial benefits. It may, however, help trade relations.
BNN’s report suggests that seven in 10 executives say the Canadian government should be allowed to apply a net benefit test on major foreign acquisitions. Almost half of the respondents said Canada’s current legislation on foreign investment review is hurting investment in Canada.
Not surprisingly, the mining and oil are the sectors most respondents believe will be the most prosperous to Canada in the long term, while 45% agreed that a lacking national energy strategy is hurting those kinds of investments in Canada.
There is also strong support for pipeline initiatives, such as TransCanada Corp’s Keystone XL and Enbridge’s Northern Gateway, to connect Alberta’s oil sands with new export opportunities, and that connecting those projects with developments in eastern Canada would be good for the economy.