Nexen to be acquired by China's CNOOC for US $15.1 billion in cash
CALGARY - Oil and gas producer Nexen Inc. (TSX:NXY) has agreed to be acquired by China National Offshore Oil Company for US$15.1 billion cash.
The Calgary-based firm will be purchased by CNOOC Ltd. in an all-cash transaction worth $27.50 per Nexen share.
The agreement is a 66 per cent premium over the 20-day weighed volume average of Nexen shares, and a 61 per cent premium on the closing price of its shares on Friday at the New York Stock Exchange.
In pre-market trading, shares (NYSE:NXY) of the company were up $9.50 to US$26.56 on the NYSE.
"This transaction will allow for significant investment in our business and opens the door to new opportunities for our employees," said Nexen chief executive Kevin Reinhart in a release.
As part of the transaction, CNOOC said it plans to list its shares on the Toronto Stock Exchange. It also intends to have a head office in Calgary to oversee its North and Central American operations.
CNOOC also noted that it intends to keep Nexen's existing management and staff.
On Friday, shares of Nexen closed down 15 cents to $17.29 on the Toronto Stock Exchange.
Nexen has faced numerous challenges over the past few years, most recently the troubled launch of its Long Lake oilsands project in northern Alberta. The project has yet to come close to its design capacity of 72,000 barrels of bitumen per day due to a number of operational glitches.
Last week, the company reported that second-quarter profits tumbled more than 50 per cent as it took a charge on an unsuccessful well in the Gulf of Mexico.
Nexen's net income was $109 million, or 20 cents per share, missing analyst estimates by seven cents. The results were also down from $252 million, or 48 cents per share, a year earlier.
In January, Nexen announced a major management shakeup, with Marvin Romanow leaving his post as CEO and Gary Nieuwenburg stepping down as the executive vice-president of the company's Canadian operations.
Reinhart was previously the company's chief financial officer.
Nexen's original partner at Long Lake, Opti Canada, filed for court protection from creditors last summer and was later acquired by CNOOC for $2.1 billion.
The Chinese company has made several other investments in Canadian companies over the past seven years, including buying stakes in MEG Energy Inc. and a 60-per cent investment in Northern Cross (Yukon) Ltd.