Canadian Prime Minister Stephen Harper expressed his concerns Thursday on Cnooc Ltd.’s (NYSE:CEO) lucrative $15.1 billion bid to purchase Canadian oil company Nexen Inc. (NYSE:NXY). Harper stressed that the potential takeover raises tough policy questions and that his government will not rush their decision on whether to approve the deal.
Under the Investment Canada Act, all foreign takeovers of a Canadian company are subject to government review and must demonstrate a “net benefit” to the country. Harper said his agencies were still collecting “information and opinions” on the Chinese state-owned Cnooc’s offer to purchase Nexen.
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“This particular transaction raises a range of difficult policy questions, difficult forward-looking issues, and those things will all be taken into account under the act in assessing the net benefit of this investment,” Harper said.
Canadian Industry Minister Christian Paradis later echoed Harper’s comments that the government would take its time to ensure it could make an informed decision. Paradis did not rule out the possibility of an extension on the review period.
According to Canadian law, the government has sole power to extend the review period an additional 30 days beyond the original 45 days. The application for purchase was reportedly received August 29.
Since 1985, the Canadian government has rejected only two proposed foreign takeovers, the most notable being the 2010 blocking of Australian BHP Billiton’s (NYSE:BHP) aggressive $40 billion attempt to purchase Saskatchewan Inc.’s Potash Corp (NYSE:POT).