Canada rejects $5.9-billion Petronas bid for Progress Energy

By Jameson Berkow
Oct 20, 2012 8:42 AM ET
Last Updated: Oct 20, 2012 5:44 PM ET
More from Jameson Berkow | @crudereporter

Goh Seng Chong/Bloomberg

Malaysian state-owned Petronas, which said on Saturday it was not ready to comment, has 30 days to make its offer more palatable. Otherwise the deal will not be allowed to proceed.” alt=”Goh Seng Chong/Bloomberg

CALGARY — In a surprise late night move on Friday, Ottawa rejected Petronas’ $5.9-billion bid for Progress Energy Resources Corp., marking the third foreign takeover Canada’s federal government has blocked.

Christian Paradis, Minister of Industry, issued a brief statement three minutes before midnight ET on Friday, saying he was “not satisfied that the proposed investment is likely to be of net benefit to Canada.”

Mr. Paradis refused to comment on the deal earlier Friday, telling reporters in Saint-Hubert, Quebec only “when the decision is … made, I will announce it properly.”

Malaysian state-owned Petronas, which said on Saturday it was not ready to comment, has 30 days to make its offer more palatable. Otherwise the deal will not be allowed to proceed. It was not clear what it could put on the table.

Progress Energy chief executive Michael Culbert said in a statement released Saturday afternoon that Petronas will appeal the federal government’s ruling and Progress will help “determine the nature of the issues and the potential remedies.”

“The long-term health of the natural gas industry in Canada and the development of a new LNG export industry are dependent on international investments such as Petronas.” Mr. Culbert said.

 

The government’s decision sheds some light on whether the far more controversial $15.1-billion offer from CNOOC Ltd. to buy Nexen Inc. will be approved. CNOOC’s status as a wholly-controlled entity of China’s Communist Party has generated widespread public concern over the proposal, which represents China’s largest attempt at a foreign acquisition to date.

Ottawa has promised its decision on China’s bid for Calgary-based Nexen would provide a framework for how future takeover bids from state-owned companies would be reviewed. CNOOC has made several promises — including retaining all of Nexen’s approximately 3,000 Canadian staff and listing on the Toronto Stock Exchange — in hopes of passing the government’s test. However, the law is unclear on what exactly defines a “net benefit.”

The decision on CNOOC’s bid for Nexen is expected in mid-November.

Maybe Canada is using this to attach more conditions to the Nexen deal

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