On November 2, Canada’s Industry Minister, Christian Paradis, stated that a review that was taking place of a bid by a Chinese state owned company for Nexen Inc was to be extended until December 10. The Harper led government has dodged making a decision on the Chinese firm’s $15.1-billion acquisition deal for the Canadian gas and oil producer thanks to the 30 day extension.
Paradis went on to say, “The proposed transaction is undergoing a rigorous review under the Investment Canada Act. A determination will be made based on the six clear factors that are laid out in detail in section 20 of the Act and the Guidelines on Investment by State-Owned Enterprises. The required time will be taken to conduct a thorough and careful review of this proposed investment.”
Paradis said that reviews under the Investment Canada Act are normal and can be extended if the acquiring company gives its consent. This is the second time the decision has been delayed and it had to be done with China National Offshore Oil Company’s permission.
NDP’s natural resources observer, Peter Julian, states that many expected a second delay in the decision and the move highlights the conservative government’s confusion on how to move ahead with the matter. Julian told Canadian Business in an interview that, “Anytime in politics when people are making decisions on a late Friday night it’s because they’re scared of public reaction.” He added that, ”They desperately want to rubber stamp it, and because they know that public opposition is growing they’re just trying to buy more and more time.”
The Nexen-CNOOC deal has become an hot issue with many people voicing concerns including the Candian Prime Minister, Stephen Harper, who said the matter, “raises a range of difficult policy questions.” There seem to be several security concerns with China and the Canadian Security Intelligence Service warned against foreign investment by state-owned firms without naming any specifics. The NDP has been more specific with its criticism and has pointed at national security, the environment and human rights as some major factors that should be reviewed.
The Prime Minister’s own party has concerns and a Conservative MP anonymously told The Canadian Press that, “One of the most pointed concerns is, this country spent the better part of a generation moving away from the Crown or the state-owned enterprises because we recognized it’s simply not an efficient way to run an economy. So there is some hesitation to allow a state-owned enterprise from a foreign acquisition come in and buy a sizeable Canadian asset.”
Sources claim that CNOOC is ready to wait out the review process because the company had planned for a long bidding process when the offer was put on the table. It seems the Chinese state owned firm expects the deal to close and have made sure that they appease all parties involved.
Delays seem to be stemming from the fact that the Investment Canada Act states that deals with WTO member countries above $330 million must give a “net benefit” to Canada. Harper has state that a clarification of what a benefit is to the country is in the works.
Canada’s Southern neighbor, the United States, has been wary of the deal and has warned the Canadians that the state run entity may not be working on free market rules and could be under the control of Beijing.
CNOOC has tried to dampen concerns by pledging leave the head quarters of the company in Calgary and list the firm on the Toronto Stock Exchange while simultaneously giving Nexen’s management in Canada control of $8 billion in assets. The Chinese firm also promises to keep Nexen’s social responsibility programs intact.
Julian thinks the government will try to announce the deal during the Christmas holidays so that citizens are preoccupied to respond. He added, ”I think the way this government works and its lack of respect for the public means that they’re going to be looking to rubber stamp it sometime during the Christmas season, hoping that public reaction will blow over.”
Source: Canadian Business
Samahope Uses Crowdfunding to Provide Surgical Procedures to the World’s Poor
Reports Indicate Bell Will Release HTC’s Windows Phone 8X On November 15
Lunches So Good Kids Can’t Ignore Them
Invigorating Ginger Smoothie
The U.K.’s Youngest Parents Ever
The new hair Jennifer Lawrence