U.S. Greenlights Cnooc Acquisition of Nexen
Feb 12th 2013 1:20PM
The Committee on Foreign Investment in the U.S. (CFIUS) has given its approval to the $15.1 billion acquisition of Nexen Inc. (NYSE: NXY) by China's Cnooc Ltd. (NYSE: CEO). The Canadian government approved the deal last December, and today's announcement clears the way for the a final closing on the sale.
The U.S. approval was needed because about 10% of Nexen's assets are located in the U.S., primarily in the Gulf of Mexico. The U.S. decision to allow the deal to go ahead is likely due to a lack of national security issues, although neither the U.S. government nor Nexen has made a statement.
When Cnooc made an $18.5 billion offer to acquire Unocal in 2005, the Chinese firm withdrew its offer before it even went to CFIUS for consideration. Chevron Corp. (NYSE: CVX) ultimately acquired Unocal.
Canada's prime minister, when he announced his government's approval of the deal, made it pretty clear that the country does not want its natural resources to be acquired by companies controlled by foreign governments: "To be blunt, Canadians have not spent years reducing the ownership of sectors of the economy by our own governments, only to see them bought and controlled by foreign governments instead." He sent so far as to say the further foreign state control of Canada's resources would not be a benefit to the country.
Chinese firms have taken stakes in a number of U.S. energy companies, primarily those that are drilling for oil and natural gas in the various shale plays. Chesapeake Energy Corp. (NYSE: CHK) and Devon Energy Inc. (NYSE: DVN) have both given up significant shares in oil and gas leases in exchange for cash.
Filed under: 24/7 Wall St. Wire, China, Commodities, Mergers & Acquisitions, Oil & Gas, Politics Tagged: CEO, CHK, CVX, DVN, NXY