Progress Disappointed with Ottawa's Rejection of Petronas' $5.4B Bid

Progress Disappointed with Ottawa's Rejection of Petronas' $5.4B Bid

Canada's Progress Energy Resources Corp said Sunday that it was "disappointed" with the Canadian government's decision to reject Petronas' acquisition bid. The company added that it would attempt to find a possible solution for the $5.4 billion deal.

"Progress will be working over the next 30 days to determine the nature of the issues and the potential remedies," the company's president and CEO Michael Culbert said in a published statement.

"The long-term health of the natural gas industry in Canada and the development of a new liquefied natural gas export industry are dependent on international investments such as (the one by) Petronas," Culbert added.

Industry Minister Christian Paradis said in a statement on Friday that he had sent a letter to Petronas indicating he was "not satisfied that the proposed investment is likely to be of net benefit to Canada."

"I came to this decision after a careful and thorough review of the proposed transaction. Under the Investment Canada Act, Petronas now has up to 30 days to make any additional representations and submit any further undertakings, which can be extended with my agreement and that of the investor. Subsequently, I will either confirm this initial decision or approve the acquisition," Paradis said in the statement.

"Due to the strict confidentiality provisions of the Act, I cannot comment further on this investment at this time," Paradis added.

An analyst with HwangDBS Investment Bank Berhad told Rigzone on Monday that Petronas appears "very keen on the acquisition."

"Petronas is likely to follow up in the coming weeks with a resubmission," the analyst said. 

Progress revealed on July 27, 2012, that the company's board of directors has approved the deal, in which Petronas would acquire all of Progress' outstanding common shares for $22.15/share (CAD22.00/share). The acquisition represents a 1.6 percent premium over Progress' closing share price for Oct. 19, 2012 on the Toronto Stock Exchange of $21.80/share (CAD21.65/share).

The transaction follows a joint venture established between Petronas and Progress last year to develop a portion of Progress' Montney shale assets in the foothills of northeast British Columbia and to explore additional opportunities to develop liquefied natural gas (LNG) export capacity on British Columbia's west coast.


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Rob DeAngelis | Nov. 2, 2012
I addition to Mr. William Greens point, why can the other provisions and/or clauses of the deal not be revealed to Canadians. Or can we be clearly informed that there are no other provisions respecting this deal. I am not understanding the need for secrecy, either on the part of the Petronas or the Government of Canada. The above not withstanding, any land owning Albertan will tell you that you do not sell the mineral rights when you sell the land.. When you sell a Canadian Company then, it would seem to me that you are selling the mineral rights as well as the land, if any. This does not sound like it is going to be beneficial to Canadians in the long run. So again, could someone shed some light on the Requirement for Secrecy?

William Green | Oct. 22, 2012
Petronas is the national oil and gas company of Malaysia. Its my understanding that Malaysia only allows for 49% direct foreign ownership of oil and gas properties there. If true, that would not be a level playing field.

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