There is just one more vote to be cast. Cnooc, the state-controlled Chinese oil and gas producer, will buy Nexen, a Canadian energy group, if – and only if – the government in Ottawa gives the nod.
Cnooc’s commitment to the deal is demonstrated by its aggressive $15bn all-cash offer, which would be China’s biggest overseas acquisition. Cnooc has ambitions for growth but limited oil and gas reserves, so acquisitions are essential. Nexen looks a good option. The Canadian company’s shareholders have accepted the deal by a 99 per cent margin. They understand that a buyer with the means and motivation of Cnooc is unlikely to appear again. Regulators have until December 10 to decide but they must not use the Investment Canada Act to keep the would-be buyer and hopeful seller apart. There is no good political or economic reason for vetoing Cnooc’s purchase of Nexen.
There is a final set of stakeholders who will not get a direct say on the deal, but who matter all the same. Private and institutional shareholders own 35 per cent of Cnooc through its listings in Hong Kong and New York. They can, of course, vote with their feet at any time, by selling. Those who have stayed put have decided that Cnooc’s earnings potential is so great that it justifies taking a back seat to a controlling shareholder whose interests may not always align with their own. Buying Nexen is clearly a good move for Cnooc. But buying Cnooc is a gutsy call for investors.