The arbs are getting gutsy.
Progress Energy Corp. and Nexen Inc. both inched higher on the stock market Thursday after a vague report out of the United States said Canada will soon release new foreign takeover guidelines.
The story said John Prato, Canada's consul general in New York, said guidelines could come by the end of November. The news service, dealReporter, did not provide quotations, according to Reuters. dealReporter is part of the Financial Times Group.
Progress climbed 3 per cent Thursday, closing at $19.88 on the Toronto Stock Exchange. Its suitor, Malaysia's Petronas, has offered investors $22 a share. Nexen, meanwhile, gained 2.7 per cent to close at $25.18 (U.S.) in New York. China's CNOOC Ltd. has bid $27.50 (U.S.) a share for Nexen. Peers of Progress and Nexen lost ground Thursday.
Petronas and CNOOC are both controlled by their respective governments, which makes both deals controversial. Foreign takeovers must be deemed a "net benefit" to Canada in order to gain approval. Nexen has operations around the world, although it produces oil out of a major project in the oil sands. Progress is a natural gas outfit.
Ottawa rejected the Petronas/Progress deal about a month ago, although sources say it was because Petronas would not agree to extend the review period. The two sides are now trying to salvage the deal and are days away from the next deadline.
When Industry Minister Christian Paradis rejected the natural gas buyout on Oct. 19, he said Petronas and Progress had 30 days to persuade him otherwise. That deadline, however, can be extended if both sides agree. Sunday, Nov. 18, marks 30 days from Saturday, Oct. 20. The Investment Canada Act is unclear on when the clock should start ticking and what happens if the deadline falls on the weekend. Investment Canada officials refuse to clarify. Progress said it cannot provide the answer because it is confidential.
The next deadline for CNOOC and Nexen's review falls on Monday, Dec. 10. An announcement on the $15.1-billion (U.S.) takeover could come before the deadline.
Sources say the Canadian government is refining its takeover rules, and wants to establish a duel-track system – one for regular corporations and a second for companies controlled by foreign governments.