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| Canada (Photo credit: palindrome6996) |
In a ruling with huge repercussions for CNOOC Ltd’s proposed $15.1 billion takeover of Nexen Inc, Industry MinisterChristian Paradis said the C$5.2 billion ($5.3 billion) bid by Petronas would not be of “net benefit” to Canada.
Although Paradis gave no reasons, Prime Minister Stephen Harper is facing legislators unhappy with the idea of doing business with China and also of letting foreign state-owned enterprises buy Canadian energy assets.
The decision – announced at three minutes to midnight on Friday and missing the deadlines for all Canadiannewspapers – surprised senior officials in the government and was a painful reminder to markets of how Ottawa vetoed BHP Billiton Ltd’s proposed takeover of fertilizer maker Potash Corp in late 2010.
After the Potash decision the government spent many months trying to reassure markets that Canada was still open for business. That effort continues today.
Yet for all the talk of attracting investment, some firms are clearly less welcome that others, particularly state-owned enterprises such as Petronas and CNOOC, which critics complain do not play by market rules.
“We’ve joined a list of countries in which a lot more resource nationalism is being practiced … starting with Potash, muscle had started to be exercised a little bit,” said John Manley, a former industry and finance minister who now chairs the Canadian Council of Chief Executives.
“And I think that’s something that is not a total disaster but it does cry out for some clarification so investors know what they’re dealing with,” he told NEWS.GNOM.ES.
Fund managers and arbitrageurs expressed frustration that Ottawa did not explain the decision.
Harper’s chief spokesman, Andrew MacDougall, declined to comment, but noted that Petronas has 30 days to make changes to the bid.
Although Harper is secure – his party has a majority in the House of Commons and the next election is three years away – he is acutely sensitive to political criticism and has cited opinion polls opposing the CNOOC move. ... Continue to read.
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