So.. What do you think?
Are the Canadians stupid or greedy?
China is trying to control the oil market.
China National Petroleum bids US$4.18B for PetroKazakhstan of Calgary Mon Aug 22, 8:49 AM ET
CALGARY (CP) - Canadian-based oil company PetroKazakhstan Inc. has struck a $4.18-billion-US takeover deal with a subsidiary of China National Petroleum Corp., a major acquisition intended to boost China's energy supplies.
CNPC International Ltd. would pay $55 US per share for the Canadian firm, the companies said Monday. In Canadian dollars, the offer is worth $5.06 billion.
PetroKazakhstan, which has its headquarters in Calgary but operates solely in the central Asian country of Kazakhstan, announced in late June it had been approached by several parties regarding a potential acquisition or merger.
PetroKazakhstan, formerly known as Hurricane Hydrocarbons, is one of the largest foreign energy companies operating in Kazakhstan and has been there for the last eight years.
The deal announced Monday would add to a series of foreign oil and gas acquisitions that China hopes will secure access to energy for its booming economy.
The announcement comes about three weeks after another Chinese oil company, CNOOC Ltd., withdrew a multibillion-dollar bid for U.S. oil and gas producer Unocal Corp. after opposition by critics who said it might threaten U.S. national security.
PetroKazakhstan also said CNPCI has agreed to consider a proposal to incorporate a new oil and gas company and capitalize it with about $76 million US in cash, to be spun out to PetroKazakhstan shareholders.
"If CNPCI accepts the proposal, CNPCI will pay PetroKazakhstan shareholders $54 US in cash and one share of (the new firm) per PetroKazakhstan common share," the Canadian firm said in a release.
The total takeover offer represents a premium of 24.4 per cent based on the average closing price of the firm's common shares on the New York Stock Exchange for the 20 previous trading days ending last Friday and a 21.1 per cent premium to the closing price.
On the Toronto Stock Exchange, the shares (TSX:PKZ - news) closed Friday at $54.90 Cdn.
The takeover agreement has been reviewed by a special committee of the board of directors of PetroKazakhstan and has been approved by the boards of directors of both PetroKazakhstan and CNPCI, with PetroKazakhstan's board recommending that its shareholders accept CNPCI's offer.
The transaction will be subject to approval by two-thirds of the votes cast by PetroKazakhstan shareholders at a meeting expected to be held in October. Closing is subject to certain other conditions, including court approvals.
The agreement prohibits PetroKazakhstan from soliciting any other acquisition proposal but allows its board to recommend any superior proposal with a break fee $125 million US. CNPCI would have the right to match any such superior proposal.
PetroKazakhstan has had a variety of high-profile troubles this year which played havoc with its share price.
In late April, a ruling from Kazakh regulators forced the company to immediately stop flaring gas - a move that slashed second-quarter production by 30 per cent - to 106,000 barrels per day from 151,000 barrels in the same period last year.
Along with the flaring issue, the company has been publicly scrapping with Russian oil giant Lukoil over a joint venture called Turgai Petroleum. Both sides have filed multi-million dollar claims against each other.
CNPC International Ltd. is wholly owned by China National Petroleum, which is ranked 10th among the world's top 50 oil companies.
The takeover of PetroKazakhstan would add closer economic ties to the growing strategic co-operation between China and Kazakhstan, which is expected to become one of the world's leading oil producers over the next two decades.
China is trying to increase its role in Central Asia, spurred in part by unease at the presence of U.S. military forces in the former Soviet region that borders Afghanistan.
Chinese President Hu Jintao visited Kazakhstan in July and signed an agreement with Kazakh President Nursultan Nazarbayev to develop a "strategic partnership."
The two governments already are partners in the Shanghai Cooperation Organization - a six-country security group led by Beijing and Moscow that is meant to combat Islamic extremism in Central Asia.
CNPC is China's biggest oil producer and the parent company of PetroChina Co. Ltd., whose shares are traded on stock exchanges in Hong Kong and New York.