Canada blocks Malaysia' s Petronas energy takeover deal

Canada has blocked a $5.2-billion bid by Malaysia's state-owned oil giant Petronas to take over Calgary-based Progress Energy Resources Corp.

In a statement issued late Friday night, Industry Minister Christian Paradis said the proposed takeover did not meet Canada's "net benefit test".

"I can confirm that I have sent a notice letter to Petronas indicating that I am not satisfied that the proposed investment is likely to be of net benefit to Canada," Paradis said.

The minister did not explain his decision, saying only that it was made after "a careful and thorough review of the proposed transaction."

"Due to the strict confidentiality provisions of the (Investment Canada) Act, I cannot comment further on this investment at this time," he added.

Under the terms of the Investment Canada Act, Petronas now has up to 30 days to make any changes to the proposed deal and send it back to Ottawa for another review.

Even as the Canadian government rejected the takeover, it painted itself as a friend of outside investors.

Paradis said his government has a "long-standing reputation for welcoming foreign investment" and "remains committed to maintaining an open climate for investment".

Progress Energy chief executive Michael Culbert said Petronas will appeal the decision, according to Bloomberg.

"We' re very surprised by the decision," Culbert said. "We believe that the transaction is of net benefit to Canada and Progress will be continuing to work with the federal government to prove that point."

Progress Energy Resources Corp. is a natural gas weighted exploration and production company based in Calgary, Alberta in Western Canada.

The company's assets are concentrated in the Foothills of northeast British Columbia and the Deep Basin of northwest Alberta where it has built an enviable land, reserves and production base.

Canada is grappling with concerns that approval of the deals could spark a flurry of takeovers of energy companies. The country is home to the world's third-largest proven oil reserves, most of them in the western province of Alberta.

Canada last blocked a foreign takeover in 2010, when it stunned markets by rejecting BHP Billiton's Canadian $39 billion bid for Potash Corp, the world's largest fertilizer maker.

BHP also had a 30-day period to come back with additional undertakings but withdrew its offer, sensing the bid was unlikely to be approved in the face of political opposition.-The Philippine Star (October 21, 2012 1:00PM)