Nexen Shares Plunge Following Petronas Rebuff
Shares of Nexen Inc. (NXY) fell as much as 20 percent on concern its $15.1 billion purchase by Cnooc Ltd. (883) may not go through following Canada’s rejection of a takeover bid for Progress Energy Resources Corp. (PRQ)
Nexen shares dropped to C$20 at 8:00 a.m. in preliminary trading in Toronto, before regular trading began on North American markets, after closing at C$25.15 on Oct. 19. In Germany, the shares of the Calgary-based company fell 10 percent to 17.55 euros.
The shares touched $21.50 in early New York trading, 20 percent below Cnooc’s $27.50 offer price. Progress Energy shares were quoted at C$18.90 in preliminary trading, down 12 percent, after touching a low of C$13.
The Canadian government rejected a C$5.2 billion bid by Petroliam Nasional Bhd. for Calgary-based Progress Energy on Oct. 19, minutes before the midnight review deadline. Industry Minister Christian Paradis said he wasn’t satisfied the bid is in Canada’s interest.
“The odds of the proposed acquisition by Cnooc getting approval have fallen,” Philip Skolnick, an analyst at Canaccord Genuity Corp., wrote in a note to clients. “We now give the deal over a 50 percent chance of closing versus our previous ‘high probability it closes’ view, with risk to the offering price.”
Jim Byrne, an analyst at BMO Capital Markets in Calgary, said “the sector in general will be under pressure, particularly those names that have been viewed as potential targets.”