Petronas to pay $5.5 billion for Progress Energy
Deal valued at $20.45 per share, a 77 per cent premium
Petronas, Malaysia’s state-run oil and natural gas company, agreed today to buy Calgary-based Progress Energy Resources Corp. for $5.5 billion.
The $20.45-per-share deal has unanimous approval from Progress’ board of directors, the companies said in a joint statement. The transaction represents a 77 per cent premium over Progress’ closing share price of $11.55 on June 27, 2012.
The deal is subject to a $150 million break free. It must also pass Canada’s so-called “net benefit” review of foreign takeovers.
Progress and Petronas formed a joint venture to develop gas properties in British Columbia last year. The companies also agreed to study the feasibility of a West Coast liquefied natural gas venture.
As a result of that process, they selected Prince Rupert, British Columbia, as the preferred location for their LNG export terminal. Several proposals to liquefy and ship gas from Western Canada are taking shape in nearby Kitimat, B.C.
In a statement, Datuk Anuar Ahmad, executive vice-president of the gas and power business for Petronas, said the transaction would combine the Malaysian company’s “significant global expertise and leadership in developing LNG infrastructure with Progress’ extensive experience in unconventional resource development to build a strong and growing world class energy business based in Canada.”
The deal comes after Petronas chief executive officer Shamsul Azhar Abbas told Bloomberg he wanted to expand the company’s presence in Canada and Australia.
Michael Culbert, president and chief executive officer of Progress, said the takeover would allow his firm to develop its land base in spite of low natural gas prices.
“Our asset base requires extensive capital to develop its large potential and ultimately access international LNG markets,” he said in the statement. “Petronas offers the size and scale that will enable our company to continue to grow and not be limited by the same cash flow challenges faced by many producers in the North American natural gas market today.”