OTTAWA - The Canadian government said Thursday it would extend its review of CNOOC Ltd.'s planned takeover of Nexen Inc. by 30 days, and suggested the review period may be extended again.
Under Canada's foreign-investment law, approval of CNOOC's $15.1 billion acquisition hinges on whether the deal is determined to provide a so-called net benefit to the country's economy. The federal government has the power to block the deal if it believes it isn't in the country's economic interest.
The government undertakes an initial 45-day review period, but in many cases extends the process. The government indicated in a statement that the review could be extended again. Under the current timetable, a government decision could emerge as early as mid-November.
"The proposed transaction is undergoing a rigorous review," Christian Paradis, Canada's Industry Minister who is overseeing the review, said in a statement. "The required time will be taken to conduct a thorough and careful review of this proposed investment."
A spokesman for CNOOC said the Beijing-controlled enterprise doesn't comment on regulatory matters. A representative for Nexen, based in Calgary, was not immediately available for comment.
CNOOC's proposed all-cash deal has sparked a debate in Canadian policy circles about the role state-owned enterprises--in particular, those from China--should play in the Canadian economy, including the resource sector. Canada's main political opposition, the left-leaning New Democratic Party, has called on the Conservative government to reject the transaction, saying the nature of the review process offers no assurances the deal would benefit Canada.
Canadian officials, led by Prime Minister Stephen Harper, have said the Nexen deal is unique because of its size and the involvement of a state-owned investor.
Copyright (c) 2012 Dow Jones & Company, Inc.
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