Nexen said on Tuesday that it had received the last regulatory approval needed for its $15 billion sale to a major Chinese oil company, after the Obama administration declared the deal free from national security concerns.
With all necessary regulatory approvals in place, Nexen is set to become the latest acquisition by the Chinese oil industry, as the country seeks more and more sources of oil and natural gas to fuel its economy.
The deal is expected to close around Feb. 25.
The buyer in this transaction, the China National Offshore Oil Corporation, or Cnooc, has been among the most acquisitive. It has announced six deals in the last two years, according to Standard & Poor’s Capital IQ. Nexen, based in Calgary, is the biggest proposed deal by Cnooc since its failed attempt to buy Unocal for $18.5 billion in 2005.
Though most of its holdings are abroad, Nexen has major operations in the Gulf of Mexico, which fall under the jurisdiction of the Committee on Foreign Investment in the United States, or Cfius.
The approval by the Obama administration comes two months after the Canadian government approved the deal. That was regarded as perhaps the biggest hurdle, given spurts of nationalistic concern over foreign buyers claiming big tracts of natural resources in Canada.
A review by Cfius (pronounced SIF-ee-us) is still regarded as potentially tough, however. The organization, which is chaired by the Treasury secretary, makes its decisions behind closed doors, and buyers are not always told why a deal is rejected.
But Cfius has approved several potentially sensitive deals recently, including the sale of the bankrupt car battery maker A123 Systems to the Wanxiang Group.
Lawyers at Cleary Gottlieb Steen & Hamilton wrote in a note to clients on Monday that the A123 approval “is evidence that even when politics, protectionism and xenophobia all appear to be significant obstacles, Cfius will not raise objections if it believes no security issues exist.”
“With proper planning and transparency,” Cleary Gottlieb added, “even politically controversial transactions can successfully negotiate the Cfius process.”
DealBook: Nexen Secures U.S. Approval of Its Sale to Cnooc
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DealBook: Nexen Secures U.S. Approval of Its Sale to Cnooc
