The head of Nexen Inc. pitched the benefits of a takeover by a Chinese company Thursday even as shareholders of the Calgary-based oil and gas producer overwhelmingly voted to support the politically-charged deal.
Still faced with the task of winning approval from the federal government, interim chief executive Kevin Reinhart said the takeover wasn’t the end for Nexen — which is active in Alberta’s oilsands, the North Sea and elsewhere.
Reinhart said China National Offshore Oil Company will keep the Nexen name and expand the role of the company’s Calgary headquarters to manage not just Nexen’s assets but also some $8 billion of the Chinese company’s other assets in North and Central America.
“This transaction will in no way close the book on Nexen (TSX:NXY) or our way of doing business,” Reinhart told shareholders after the vote to approve the deal.
“Instead it will open up a new chapter in our proud history, one I believe has the potential to be as exciting as all the past ones.”
The $15.1-billion takeover still requires approval by Ottawa under the Investment Canada Act. The deal faces the key “net benefit” test that tripped up BHP-Billiton’s hostile takeover bid for Potash Corporation of Saskatchewan (TSX:POT).
Concerns have been raised by Alberta Tory MP Ted Menzies, who has said he’s been getting a lot of negative feedback from constituents about the takeover by a state-owned Chinese firm.
Prime Minister Stephen Harper has also said that China needs to show that its state-run enterprises can be trusted to play by the same rules as Canada.
NDP Energy and Natural Resources critic Peter Julian said concerns have also been raised about CNOOC’s environmental and human rights history as well as its record in other takeovers.
“I think the public is losing confidence in the Harper government’s ability to handle in a transparent way this particular acquisition,” Julian said.
“A lot of Canadians are concerned about the process and they don’t see the federal government responding, consulting or listening in any way.”
Julian said Ottawa failed to deliver on promised changes to the Investment Canada Act review process after the PotashCorp deal was killed and now the same problems are happening again.
Liberal MP Marc Garneau asked if a Canadian company could purchase a similar company in China.
“That would be a level playing field and that’s the kind of consideration we’d like to make sure that the government is looking into so that everything is fair for Canadian investors abroad as well as for Chinese and other countries wanting to invest in Canada,” Garneau said.
Reinhart said in addition to its pledge to keep the head office in Calgary, CNOOC would seek a listing on the Toronto Stock Exchange and carry on Nexen’s social responsibility programs in Canada and around the world.
“And importantly, CNOOC plans to keep the Nexen name. This tells me they understand who we are and what we stand for. The Nexen brand has been a large contributor to our success around the world and has provided us with a significant competitive advantage,” he said.
The Chinese energy giant welcomed the results of the shareholder vote.
“The offer is a compelling one, and offers benefits for all Nexen’s stakeholders, including employees and communities,” CNOOC spokesman Peter Hunt said in a statement.
“CNOOC Ltd. will continue to pursue all regulatory approvals required to close the transaction.”
CNOOC has offered $27.50 per share in cash for Nexen, which has offshore oil and gas assets around the world as well as a stake in the Long Lake oil sands project in Alberta and shale gas operations in B.C.
Nexen shares closed up a nickel at $24.72 on the Toronto Stock Exchange on Thursday, suggesting that at least some investors believe there is a chance Ottawa will reject the deal.
The offer had required approval by two-thirds of the votes cast by both Nexen’s common and preferred shareholders. The common shareholders voted 99 per cent in favour of the deal, while the preferred shareholders voted 87 per cent to approve the agreement.
Nexen and CNOOC were familiar with one another before the deal was announced earlier this year.
The two are partners in the Gulf of Mexico and at the Long Lake oilsands project near Fort McMurray, Alta., which has been beset by a litany of operational glitches and has yet to come close to meeting its production targets.
China’s appetite for raw materials to fuel its growth has seen the Asian company scour the world for resource companies and projects.
CNOOC’s deal for Nexen isn’t the only deal in the Canadian oilpatch involving a Chinese company.
Talisman Energy has signed a deal to sell a 49 per cent interest in its UK division to Chinese firm Sinopec Corp. for $1.5 billion, while Athabasca Oil Sands Corp. sold its remaining 40 per cent stake in the MacKay River oilsands project to joint-venture partner PetroChina, giving a Chinese firm full control of an oilsands asset for the first time.
And last year, Sinopec bought conventional oil and gas-focused Daylight Energy Ltd. in its entirety.