Canadian government blocks Petronas bid for Progress Energy

EnergyReuters

Canada's government blocked Malaysian state oil company Petronas' C$5.17 billion ($5.22 billion) bid for gas producer Progress Energy Resources Corp on Friday in a surprise ruling that could have huge implications for the far-larger proposed takeover of Canadian oil and gas company Nexen by China's state-owned CNOOC.

"I can confirm that I have sent a notice letter to Petronas indicating that I am not satisfied that the proposed investment is likely to be of net benefit to Canada," Christian Paradis, Canada's minister of industry, said in a late-night statement.

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Petronas has up to 30 days to make any additional representations and submit any further undertakings that could make its deal more palatable to the Canadian government.

"Due to the strict confidentiality provisions of the (Investment Canada) Act, I cannot comment further on this investment at this time," Paradis said.

The Petronas bid for Progress had not been expected to run into hurdles in a review process that asks the government to examine whether a deal is of "net benefit" to Canada.

But the deal attracted a lot more attention and scrutiny after Chinese state-owned oil major CNOOC Ltd made a C$15.1 billion bid for Nexen Inc.

Some pundits suggested that Petronas would need to provide a stronger set of undertakings due to the additional attention on their deal following CNOOC's proposal.

It was the second time in two days that Canadian authorities had intervened to prevent one company taking over another.

The country's broadcast regulator on Thursday blocked BCE Inc's C$3 billion ($3.05 billion) bid for Astral Media on Thursday, declaring the deal would give too much power to BCE, already Canada's biggest telecoms company and owner of numerous TV and radio assets.

Canada last blocked a foreign takeover in 2010, when it stunned markets by blocking BHP Billiton's $39 billion bid for the world's largest fertilizer maker, Potash Corp.