Nova deal approved

CALGARY — Nova Chemicals Corp. (TSX:NCX) shareholders have “overwhelmingly” given the green light to a US$2.3-billion takeover by Abu Dhabi’s International Petroleum Investment Co.

A switching engine shunts tanker cars at the Nova Chemicals Joffre plant Monday.

CALGARY — Nova Chemicals Corp. (TSX:NCX) shareholders have “overwhelmingly” given the green light to a US$2.3-billion takeover by Abu Dhabi’s International Petroleum Investment Co.

“The IPIC transaction represents a good place to be for all of our stakeholders,” Nova CEO Jeff Lipton told his company’s annual general meeting in Moon Township, Pa., on Tuesday.

IPIC, owned by the government of the Emirate of Abu Dhabi, announced its US$6-per-share offer for the indebted plastics maker in February.

In announcing its friendly acquisition, IPIC had said it intends to keep Nova’s North American management team in place.

Nova chief operating officer Chris Pappas is set to take the helm as CEO when Lipton retires next month.

“The IPIC transaction couldn’t have come at a better time for Nova Chemicals and its stakeholders,” Pappas told the shareholder meeting.

“The financial strength of IPIC will stabilize our company and allow us to grow when it makes sense.”

Nova’s operations include ethylene and polyethylene plants at Joffre.

Before the acquisition, the company’s stock had been dragged down by concerns it would not be able to find the cash it needed in troubled financial markets.

“The market priced in not only the risk associated with that, but also the potential significant dilution to shareholders because we probably would have had to issue additional equity to cope with the financial environment expected for the foreseeable future,” Lipton said.

“I believe that the combination of Nova Chemicals’ assets and IPIC’s financial strength will create a very strong company capable of growing and taking advantage of the still bright long-term future of our industry.”

Nova shares sank as low as C$1.28 in early February, down from more than C$30 in September.

On Tuesday they closed at C$7.14 on the Toronto Stock Exchange.

The IPIC acquisition, which needs U.S. and Canadian regulatory approvals, is expected to close in late May or early June.

The petrochemical industry will continue to be hit by capacity issues in Alberta as well as by the general global economic malais.

Pappas said he is optimistic about the sector’s longer-term outlook.

“Although current market conditions may be choppy, I believe the chemical industry and specifically the ethylene and polyethylene business will recover more quickly than other parts of the economy and that the recovery will last a very long time,” he said.

“Historically, polyethylene has grown very steadily in good times and bad. In this recession we are seeing some easing in that growth, but nothing like the severe declines seen in almost every other commodity out there.”

The Nova deal is the latest in a series of recent Canadian takeovers by the United Arab Emirates.

Abu Dhabi National Energy Corp., also known as TAQA, has spent billions on acquiring Northrock Resources Ltd., PrimeWest Energy Trust as well as Pioneer Natural Resources Co.’s Canadian arm.

Nova Chemicals was spun off years ago as a commodity chemicals producer after its former parent, Calgary-based Nova Corp., was acquired by TransCanada PipeLines in the late 1990s.

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