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Bloomberg News – Alberta Premier Alison Redford asked the federal government to impose tougher management and employment conditions on CNOOC Ltd.’s $15.1 billion takeover offer of Nexen Inc. before approving the transaction, according to a person familiar with the matter.
Redford wants guarantees that at least 50 percent of Nexen’s board and management positions will be held by Canadians, the person said on condition they not be identified because the discussions are confidential. The request came in a recommendation provided to Industry Minister Christian Paradis and the government’s investment review division.
Alberta’s conditions may impose additional costs and risks for CNOOC at a time when oil-sands producers face a rising supply of North American crude and a lack of pipeline infrastructure threatens to stall sales. Prime Minister Stephen Harper’s government is reviewing the bid under the nation’s foreign takeover law, which specifies transactions need to have a “net benefit” to the country in order to win approval.
Other recommendations made by Redford’s government are for CNOOC to maintain workforce levels for at least five years, to strengthen commitments to keep planned capital spending and to clarify plans for research and development, the person said, adding Alberta’s government has indicated it would not object to the transaction if the conditions were met.
Jay O’Neill, director of communications for Redford, said the premier has said the transaction is beneficial. He declined to comment directly on the details of Alberta’s submission to the federal government.
“We were asked for our position and we did submit that position,” O’Neill said. “Our premier has been pretty clear in terms of her discussions around the deal since it was first announced and that there does appear to be significant benefit not only for Alberta but also Canada.”
In the July 23 announcement of its $27.50 a share bid, CNOOC pledged to follow through on Calgary-based Nexen’s capital spending plans and maintain the company’s employment level and management, without giving details or a time frame.
Beijing-based CNOOC has also promised to make Calgary the head office of its North American operations, as well as list its common shares on the Toronto Stock Exchange.
Steven MacKinnon, a Canadian spokesman for CNOOC, said the company doesn’t comment on the regulatory process. CNOOC is controlled by state-owned China National Offshore Oil Corporation, which indirectly owns 64.4 per cent of the company’s shares.
A spokeswoman for Paradis, Margaux Stastny, said she would look into the matter when contacted for comment. Paradis reiterated to reporters Wednesday that the CNOOC-Nexen bid would be closely scrutinized, and rejected opposition requests for public hearings on the pact. The government said Aug. 29 it had received CNOOC’s application.
For the rest of this article, please go to the Toronto Star website: http://www.thestar.com/business/article/1266127–redford-demands-tougher-conditions-for-nexen-cnooc-approval-source