Cnooc Gets First OK for Nexen Purchase (NXY, CEO)

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The provincial court of Alberta has cleared the $15.1 billion acquisition of Canada’s Nexen Inc. (NYSE: NXY) by China’s Cnooc Ltd. (NYSE: CEO). Nexen shareholders also voted overwhelmingly in favor of the deal yesterday as well. The two approvals were not unexpected, but neither is controlling.

The Canadian government is reviewing the proposed acquisition and is expected to rule on it by mid-November. The U.S. government, through the Committee on Foreign Investment in the United States (CFIUS), must also approve the acquisition because about 10% of the assets included in the sale are located in U.S. waters in the Gulf of Mexico. The government of China must also approve the deal, but since the government owns the controlling stake in Cnooc’s parent that should be pretty easy.

But there is opposition to the acquisition among politicians in both Canada and the U.S. At least two members of Canadian Prime Minister Stephen Harper’s cabinet oppose the deal, and there is bipartisan opposition from members of the U.S. Senate.

Cnooc withdrew its offer to acquire Unocal in 2005, before the deal could be rejected by U.S. regulators.

Paul Ausick

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