Cnooc Ltd. to buy Nexen Inc. for $15.1 bn
Separately, Sinopec Corp. to buy 49% interest in Talisman's U.K. unit for $1.5 bn
Cnooc Ltd. will pay $15.1 billion in an all-cash deal for Nexen Inc.
The acquisition is the biggest overseas takeover by a Chinese company since Cnooc’s failed $19-billion bid for Unocal Corp. in 2005, Aibing Guo at Bloomberg writes.
Cnooc will pay US$27.50 per Nexen common share, or a 61 per cent premium to Nexen’s closing share price July 20, according to a statement. The deal includes a $425 million break free and has received approval from both Nexen’s and Cnooc’s boards of directors. It is expected to close in the fourth-quarter of 2012.
Nexen, which has been searching for a new chief executive officer for six months following the abrupt departure of Marvin Romanow earlier this year, has struggled to turn its oil sands property at Long Lake into a moneymaker.
Cnooc bought a partner in that scheme, debt-laden Opti Canada Inc., for $2.1 billion last year. As part of the deal for Nexen, Cnooc plans to use Calgary as its head office for North and Central American operations, the company said.
Cnooc will maintain Nexen’s current management team and employees. The company will also list its common shares on the Toronto Stock Exchange, and maintain Nexen’s charitable programs.
Those moves could be designed to appease Canadian regulators, who must still sign off on the deal, Tim Kiladze writes at the Globe and Mail.
Roughly one-third of Nexen’s total production (207,000 barrels per day in the second-quarter) and 11 per cent of the company’s cash flows are derived from Canadian assets, CIBC World Markets analyst Andrew Potter said in a note to clients.
That could make it difficult for regulators to oppose the transaction solely on grounds that it does not provide a “net benefit” to Canada, Potter says.
Indeed, he thinks the deal could actually accelerate Nexen’s exploratory foray into West Coast liquefied natural gas with Japan’s Inpex Corp., “which would infer higher investment, royalties and taxes within Canada.”
In a separate deal announced today, Talisman Energy Inc. agreed to sell a 49 per cent interest in its U.K. division to Sinopec Corp. for $1.5 billion. Calgary-based Talisman has been struggling to cope with rock-bottom North American natural gas prices. The company will use $500 million from the transaction to repurchase shares, it said in a statement.