One upon a time in the west….Little yurt on the prairie. Not quite yet. Sheriff Harper and deputy Sheriff Baird and posse have sent Petronas packing to the hills keeping Canada’s so called “dirty oil” sanctified as all-Canadian sludge, at least for the time being. With the recent scandal uncovered by Carson Block, Muddy Waters Research, of Sino Forest and alleged giant forestry, which Block chainsawed down the shares to shrub and then dandelion size; Not surprising federal law enforcement has been quick on the reject button. Evidently, the question is how to deal with state sanctioned cartels which theoretically could roll over Canada’s prairies and gobble evert Toronto Stock Exchange listed oil and gas company, belch, burp and ask “is that all?” Within two years all the low lying fruit could be sold off and the industry hollowed out by foreign takeover. It’s a new phenomenon, dealing with state owned takeovers where the CEO’s are basically glorified civil servants….
—The federal government’s surprise move to block the $6-billion takeover of Progress Energy Resources Corp. is adding to growing concerns about a “Canadian discount” that weighs on share prices and frustrates companies’ ability to raise capital and do deals.
Investors reacted swiftly on Monday to the rejection of the bid for Progress by Malaysia’s Petronas . Progress shares dropped more than 9 per cent, while other energy shares sank sharply.—Read more:http://www.theglobeandmail.com/report-on-business/blocked-petronas-deal-adds-to-canadian-discount-worries/article4629910/ image:http://www.nova-cinema.org/spip.php?article9823
( see link at end)…Progress Energy Resources Corp. and its state-owned suitor, Malaysia’s Petronas, have gone to Ottawa in an attempt to rescue their $6-billion union and seek an explanation for why the government wouldn’t approve it.
Executives from the two companies were on their way to the capital on Monday, shortly after reassuring investors that they haven’t given up hope of closing the deal….The federal government’s surprising decision to turn down the deal just before midnight on Friday roiled the shares of Canadian energy companies. Sources told The Globe and Mail on the weekend that the government wanted more time to assess the deal, but Petronas said no – leaving Ottawa no choice but to issue a formal rejection of the deal.
—Over all, this $2.3-billion loss is split with the government losing roughly $550-million, and the private sector losing $1.75-billion.
This may be the most expensive merger rejection in Canadian history; while the BHP Billiton-Potash deal was larger, BHP was not offering much of a premium over market value.—Read More:http://www.theglobeandmail.com/report-on-business/economy/economy-lab/with-163-words-on-petronas-23-billion-in-wealth-disappears/article4628089/ image:http://io9.com/5921290/10-rules-of-blockbuster-movies-that-hollywood-forgot
The government has not indicated why it’s hesitant about the deal, which many investors had assumed would get approval without much difficulty. Prime Minister Stephen Harper did not discuss the specifics at a press conference on Monday, but reiterated his promise to provide a clearer policy on foreign takeovers when the government evaluates the $15-billion bid by CNOOC Ltd. for Nexen Inc….
…Mr. Harper said each deal is assessed on its own merits, and Ottawa welcomes foreign investment so long as it meets the Investment Canada Act threshold of providing a benefit to the Canadian economy.
“We are in the process of obviously gathering the forces and getting to Ottawa to fully understand the reasons,” Progress’ Greg Kist, vice-president of marketing, government and corporate relations in an interview. “What are the issues, what is outstanding, what are the remedies that are necessary here?”…
—But everyone agrees the government itself is struggling to achieve a balance between investors who want Canada to keep its doors open to foreign capital and Canadians who are worried about too much foreign control of natural resources.
“The minister did indicate, as you know, on Friday that the government is not at the current time in a position to say that the particular transaction is a net benefit to Canada,” Prime Minister Stephen Harper said Monday.—Read More:http://business.financialpost.com/2012/10/22/how-the-petronas-progress-deal-all-came-falling-down/ image:http://culturecraver.tumblr.com/post/30103291195/heres-our-list-of-fantastic-free-events-this
Petronas, he noted, publically discloses financial reports, answers to a board, and some of its subsidiaries trade publicly – all of which should help alleviate concerns that the company does not play by Western business rules. Another source close to the deal believed Petronas’ listings in Malaysia helped satisfy the corporate governance requirements….Read More:http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/canadians-foreign-investors-must-wait-for-takeover-clarity-harper/article4628162/
But to give the Chinese their just due, they are willing to balance off the local backlash by paying a substantial premium for what they want, and are given to a long term view with an eye to future value. The Canadian infrastructure for energy is there, and importantly they are also paying, buying into, the Canadian culture of extraction and exploration in harsh climes. Down the road, with unlimited capital, they would want pipelines and ports to the west coast to haul the booty off. its a game changing phenomena and one that puts the Obama administration in a bad light regarding Keystone XL, giving Canada the out and plausible pretext to diversify its export trade.If the “unseen hand” of America is behind the Petronas rejection, what do they have to offer in return? Can Darryl Hannah dance on the tundra or do the mermaid thingie in Great Slave Lake?
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