Nexen jumps after Canada OKs CNOOC's takeover

Shares of energy company Nexen jump after Canada OKs CNOOC's $15.1 billion takeover

Associated Press

NEW YORK (AP) -- Shares of energy producer Nexen Inc. jumped Monday after Canada approved a proposal from China's state-owned CNOOC to buy the Canadian oil and gas producer for $15.1 billion.

THE SPARK: Canadian Prime Minister Stephen Harper approved the acquisition Friday after several months of review.

BACKGROUND: Nexen, a mid-tier energy company, operates in western Canada, the Gulf of Mexico, the North Sea, Africa and the Middle East. Its biggest reserves are in the Canadian oil sands. It produced an average of 213,000 barrels of oil a day in the second quarter.

The board of the Calgary, Alberta, company approved the takeover in July after CNOOC offered a 62 percent premium on the stock price. Shareholders also have approved the sale. The transaction still needs to be approved in Britain and the U.S. where Nexen has assets.

The acquisition would vastly expand CNOOC's holdings in Canada, where the company already has invested about $2.8 billion.

Concerns had been raised that such approvals could lead to a flood of deals that put control of Canada's vast energy resources in Chinese hands, but Harper said the approval should be seen as the end of a trend, not the beginning. He said no other industrialized country would allow a major sector of its economy to be taken over by state-owned companies from another country.

SHARE ACTION: Shares of Nexen increased $3.34, or 14.2 percent, to $26.86 in midday trading after rising as high as $26.98 earlier in the session, its highest level since March 2011.

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