CNOOC's Acquisition of Nexen Gets Crucial US Approval
By Jerin Mathew | February 13, 2013 7:33 PM EST
China's state-owned CNOOC has jumped the final hurdle in its acquisition of Canada's oil firm Nexen, as the US authorities gave their nod for the deal.
The $15.1bn (€11.2bn, £9.6bn) deal, China's largest foreign takeover, has already been approved by the Canadian and the European authorities, but was requiring the approval from the US as Nexen has operations in the country.
The US, which has traditionally been more cautious than Canada of Chinese investment, took a long time in assessing the impact of the deal. There have also been speculations that Washington might want Nexen to dispose of the US assets.
In 2005, The US regulators had blocked CNOOC's attempt to buy oil company Unocal Corp for $18.5bn over concerns that the deal would give China access to key US assets.
Nexen said it has received approval from the Committee on Foreign Investment in the United States (CFIUS) and currently expects the closing of the deal to happen in the week of 25 February, seven months after the China-based oil and gas producer made its bid of $27.50 per share.
The approval marks the latest win by Chinese firms in acquiring US interests. In January, CFIUS approved the acquisition by China's Wanxiang Group of bankrupt battery maker A123 Systems, despite criticisms regarding strategic importance of the deal.
In 2012, Chinese buyers agreed 46 deals worth more than $10bn to acquire US companies or stakes in US companies, according to Dealogic.
The approval marks a significant milestone for CNOOC, which will receive new offshore production facilities in the North Sea, the Gulf of Mexico and off western Africa, as well as producing properties in the Middle East and Canada.
The deal will result in CNOOC gaining control of Nexen's Long Lake oil sands project in the oil-rich province of Alberta and will provide the company with billions of barrels of reserves.
Chinese oil firms have been looking to expand their presence in line with the ever-increasing energy needs in the economy, which is experiencing steady growth.
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