Nexen Shareholders Approve $15.1 Billion Cnooc Deal
09/20/2012| 06:46pm US/Eastern
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TORONTO--Nexen Inc. (NXY, NXY.T) shareholders overwhelmingly approved Cnooc Ltd.'s (CEO, 0883.HK) proposed $15.1 billion acquisition, clearing an early hurdle in what's still expected to be a long road toward final approval.
At a shareholder meeting in Calgary Thursday, Nexen said 99% of votes cast by common shareholders supported Cnooc's offer, which included a large premium. The transaction now faces a series of higher regulatory hurdles, including reviews by Canada's federal government and the U.S.
State-controlled Cnooc is China's largest offshore oil company by production. By acquiring Nexen, it would gain ownership of oil and gas reserves in western Canada, the U.K. North Sea, the U.S. Gulf of Mexico and offshore Nigeria.
"Today's shareholder vote is one step in the transaction's approval process," Kevin Reinhart, Nexen's interim president and chief executive, told shareholders following the vote. "It's now in the (regulators') hands to assess the transaction," he said.
Canada's federal government requires any big foreign deal to have a "net benefit" to the economy, and Prime Minister Stephen Harper and some of his ministers have signaled they would take into consideration broad issues such as market reciprocity and Cnooc's state-owned status.
Meanwhile, the country's official opposition, the New Democratic Party, has recently expressed concern over the deal, without yet saying whether it would come out against the tie-up. Peter Julian, a senior NDP legislator, said Thursday his party is growing increasingly skeptical about Cnooc's planned takeover, and is likely to unveil a more "definitive" view on the transaction in the coming days. To date, the NDP has focused its criticism on the government's review process, which critics have said isn't opaque.
A spokesman for Cnooc declined to comment on the NDP concerns.
The NDP's view may influence public opinion over the deal. But Mr. Harper has a majority in parliament, so if his government approves the deal, the NDP can't stop it.
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