Hit reject button [Nexen Takeover] – by Brian Lilley (Sudbury star – August 3, 2012)

The Sudbury Star is the City of Greater Sudbury’s daily newspaper.

It’s a given that China is a country Canada must deal with, but the idea that Canada must sell out to China is not. Currently, China’s state-owned oil company CNOOC is attempting to make a big play in Alberta’s oilsands with its proposed takeover of Nexen. The deal needs the approval of the federal government and despite Stephen Harper’s recent warming to China and his commitment to expanded trade, he must say no to this deal.
 
Harper is a believer in free trade among nations, but with China we don’t have free trade or anything close to it. Supporters of the deal claim it would be hypocritical of Canada to push for free and open trade and then turn down CNOOC’s offer to buy a Canadian oil company. Not so.
 
CNOOC, which stands for China National Offshore Oil Corporation, wants to buy all of Nexen which has oil rights in Alberta, the Gulf of Mexico and the North Sea. There is no chance a Canadian company could attempt a similar takeover of CNOOC. One of the other major problems with allowing the takeover is that CNOOC is not a private company operating on a level-playing field.
 
This is a company wholly owned by the government of China and, as such, has tremendous advantages that private companies do not have. CNOOC can borrow money at the same rate as the Chinese government which is well below commercial rates.
 
They also have no need to make a profit and any losses are covered by the government.
 
Nexen shares were trading at $17 when CNOOC offered $27.50 per share on July 23. Would a private company have been able to make such a generous offer? Perhaps, but the point is China wants this asset and has sent CNOOC to get it regardless the price.
 
The offer includes all kinds of promises about jobs in Canada, a North American headquarters in Calgary and investment. It’s all poppycock dreamed up by CNOOC’s highly paid lobbyists in Ottawa to make the deal palatable to the Harper government.
 
For the rest of this column, please go to the Sudbury Star website: http://www.thesudburystar.com/2012/08/02/hit-reject-button