The Chinese government is treating its role in potential takeovers of two Canadian companies separately, and is not linking them in order to pressure Ottawa to approve a deal between China’s CNOOC Ltd. and Canadian oil producer Nexen Inc., Canada’s agriculture minister said on Tuesday.
Approval from China’s Ministry of Commerce (MOFCOM) under Chinese anti-monopoly law is the final regulatory hurdle for Glencore International PLC’s $6.1 billion takeover of Regina grain handler Viterra.
Viterra said on Friday that the deal’s closing date deadline would extend until Dec. 10 at the latest.
Viterra’s assets in China include a joint-venture stake in a canola crushing plant at Fangchenggang, a trading office in Shanghai and a representative’s office in Beijing.
China is also waiting to hear if Canada will approve state-owned CNOOC’s $15.1 billion takeover of Nexen. Dec. 10 is also Canada’s deadline to rule on that transaction.
"They’re treating these very differently, which of course they are," Agriculture Minister Gerry Ritz said in Winnipeg. "One is an investment into their country, predicated on what Glencore will do into the future. The other is an investment into Canada."
Concerns about delays in Chinese approval of the deal drove Viterra shares to a seven-month low in late October, although the stock has since regained some ground. On Tuesday, the shares were at $15.74, three per cent below Glencore’s offer.
Some investors have speculated that China is holding off on its Viterra decision until it finds out if the Canadian government will approve the Nexen deal.
The extended review has also delayed side deals Glencore has made to transfer some Viterra assets to Agrium, Richardson International and CF Industries.
– Rod Nickel writes for Reuters from Winnipeg.