The Nexen Deal: a Trade-off Between Protection and Connections?
According to Maclean’s business blog, discrepancies have recently arisen over the projected approval or refusal of the Nexen deal; China’s $15.1 billion bid for a piece of Canada’s oil sands.
Reading this blog post lead me to see that the controversial prospect of the deal is largely related to financial and political disparities. Nexen shareholders, for example, are evidently in favour of the deal being approved, as they would receive a 61 per cent premium on shares. Likewise, Ottawa has recently been consistent in its rejection of foreign deals. Rejecting China National Offshore Oil Corporation’s “friendly takeover” would raise the eyebrows and doubts of foreign investors, who would likely be confused in regards to Ottawa’s lack of a strategy to deal with foreign takeovers. Should the deal be rejected therefore, Canadian resource firms would certainly fall.
On the political side, however, the rejection of the plan is actually favoured, because from a political point of view, the government would be “wrap[ping] itself with a national cloak” and demonstrating its independence.
After our class regarding finance and investment, I am satisfied that I have a broader knowledge of this topic and can apply this knowledge when considering articles such as this. However, while concerns with investment and the economy are undoubtedly important, I question Canada’s dependancy on other countries. I personally don’t see protectionism as a means of making everything in Canada “sacred”, but more so as a means of conserving our resources and leading the way to a sustainable future.
Sources:
http://www2.macleans.ca/2012/11/01/if-ottawa-says-no-to-china-on-nexen-deal-therell-be-a-price-to-pay-experts/#more-310091
http://mindthis.ca/nexen-china/