China resubmits deal to acquire Canada’s Nexen to US regulator

In an unusual move, Chinese state-owned CNOOC and Canada’s Nexen Inc. (NYSE,TSX:NXY) have resubmitted notice of their potential deal to US regulators, which will reset the clock on Washington’s approval for the $15 billion energy deal.

China National Offshore Oil Corp (CNOOC) is seeking to acquire the Calgary-based energy company, a transaction already approved by Nexen’s shareholders and board.  However, regulators in Canada, the U.S., the European Union and China are still deciding whether to grant their approval on the proposed takeover of Nexen.

Late on Tuesday the Canadian firm announced that it has withdrawn and resubmitted its application to the Committee on Foreign Investment in the U.S. (CFIUS) by “mutual agreement” with the committee.

Although Nexen did not offer a reason for this unconventional measure it said discussions with CFIUS continue, “with a view to completing the CFIUS process as expeditiously as possible.”

Regulatory barriers

Despite being based in Canada, Nexen’s offshore holdings in the Gulf of Mexico forces the company and CNOOC to require approval from American regulators before they can go ahead with the deal.

U.S. politicians on both sides of the aisle have cautioned Ottawa against leaving the country’s natural resources in the hands of a Chinese state-owned company. And the public doesn’t seem thrilled by the prospect either.

In October, a poll among more than 1,200 residents of the province of Alberta showed that most of them are adverse to the idea of full ownership by China and to investments in Alberta by Chinese-owned enterprises.

A more recent survey, published last week by Abacus, showed Canadians are protectionists and that 63% oppose foreign ownership of a domestic natural resource company (compared to 53% of Americans respondents in the U.S.).

Additionally, a majority of Canadians strongly oppose Chinese, Indian or Russian control of their country’s resources, but are less bothered by the idea of Norwegian or American owners.

Respondents said they would support Norway over the U.S. controlling a resource firm, followed by Germany (31%), Brazil (24%) and then China (20%).


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