Canada says it views state enterprises, like Petronas, differently(update)

  • Business
  • Tuesday, 20 Nov 2012

OTTAWA: Canadian Prime Minister Stephen Harper signaled on Monday his government will treat state-owned enterprises differently than private-sector companies when it decides whether to approve foreign investments in Canada.

Ottawa is currently evaluating a $15.1 billion bid by China's state-owned CNOOC Ltd to take over Canadian oil producer Nexen Inc as well as a $5.2 billion proposal by Malaysia's Petronas to buy Progress Resources Energy Corp. Decisions are expected in the next few weeks.

At about the same time as those announcements are made, the Conservative government plans to set out a broad policy framework on direct foreign investment, although it already introduced some guidelines for investments by state-owned enterprises in 2007. The guidelines refer to the market orientation and corporate governance of foreign buyers.

"We created guidelines specifically for state-owned enterprises because - yes - state-owned enterprises represent a different kind of player and obviously those are some of the issues that are before us today," Harper said in a question-and-answer session at the Canadian American Business Council.

Shares of Nexen and Progress Energy continued edging lower following the remarks, against a 1.8 percent rise in the Toronto Stock Exchange's energy sector.

The government is expected to decide on the two bids and lay out its new framework by Dec. 10, its deadline for deciding on the Nexen bid.

Former Canadian Industry Minister Jim Prentice, now a banker, told reporters after speaking at the business forum that it is critical for Canada to keep in mind the need for market access in the Asia Pacific.

"It's a watershed in the sense that we need to be mindful that what we're trying to do is build out a strategic partnership with China, and access to other markets as well," he said.

"It's clear for me from the work that I do internationally that people are watching to see how that plays out. The PM's (prime minister's) emphasis on doing this right, taking the time to do it, is important."

Nexen shares closed 1.8 percent lower at C$25.32 on the Toronto Stock Exchange and down 0.7 percent at $25.42 in New York, compared with CNOOC's bid of $27.50. Progress shares ended 1.9 percent lower at C$20.05. The Petronas bid is C$22.50 a share. - Reuters

CNOOC accepts new Canadian terms to win Nexen deal nod: report

The Canadian government has taken on board requests made by Alberta Premier Alison Redford last month, which include guarantees that at least 50 percent of Nexen's board and management positions be held by Canadians, the report said.

Earlier this month, CNOOC Chairman Wang Yilin said he was confident of winning regulatory approval from Canada this year for its bid for Nexen, despite Ottawa extending its review of the deal twice. (For a related story, click [ID:nL3E8M92A8])

Canada has been conducting a review to determine whether a takeover by the Chinese state-owned enterprise would bring a "net benefit" to Canada. Ottawa said on November 2 that it had extended the review by a month to December 10.

A CNOOC spokeswoman in Beijing declined to comment on the report but reiterated the company's pledge to retain all of Nexen's management team and employees.

CNOOC's Hong Kong listed shares were up 2 percent on Tuesday morning. Nexen shares ended down 0.4 percent on Monday. - Reuters

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