Canada rejects Petronas takeover of Progress Energy

Petronas in Canada

The Canadian government shocked the energy industry last Friday night with the announcement that it would reject a takeover bid for Progress Energy Resources Corp. by Malaysia's Petroliam Nasional Berhad, according to Bloomberg.

Petronas had offered $5.9 billion to purchase the major Canadian oil exploration company, one of several important deals with foreign firms.

However, Canadian officials decided to strictly enforce rules requiring that companies demonstrate how a takeover benefits the country.

"I feel like this is an experiment on the part of the government asking for more explanation on how this deal would be a net benefit and maybe in the future these transactions need to have a part of the transaction that spells it out," one portfolio manager told the Financial Post.

Already, the rejection is expected to lead to significant losses for energy stocks across the board.

However, the Financial Post reports the decision could have huge ramifications for the proposed purchase of Nexen by the China National Offshore Oil Corporation, as well as the more recently-announced takeover of Celtic Exploration.

Oil and gas exploration prospects for Canada and its provinces can be found at PennEnergy's Research area.

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