Daal, here's some color from the Canadian POV (yes I'm a Canuck). The Conservatives off the press are very friendly with China, even with the human rights criticisms. This is not BHP and POT awhile back. NXY is simply a player in Alberta where there are multiple major players operating. If CNOOC were to buy out Husky or PetroCan, this may be a different story, but they are not. OPTI and NXY were involved primarily in developing the oilsands, and OPTI with it's debt problem refinanced with pretty much selling itself to NXY. My take is CNOOC is simply finishing off the pie. If the Canadian regulators didn't say no to OPTI, what reasoning are you offering that they would block NXY? You obviously have to do your own DD and see if any policies CNOOC are implementing will lead to job cuts at NXY, hence the net benefit that the PM's office is reviewing. I would argue the real wildcard here is how much sway US influence will have on the decision. I would read up on Keystone and the Enbridge pipeline to get a feel for the climate of where Ottawa is leaning. BTW, when you make statements like you feel the Canadian govt isn't gonna let this pass because this is a bigger asset, you really have to quantify (because you are posting this publicly) what that means. If you were to make a call on say mkt action, nobody would call you out for it, but saying you are able to observe political machinations on a small sample size is a different ballgame. Other people on this thread have called you out multiple times for that.
Per a WSJ article US regulators and even European regulators will have a say on this matter so this is beyond just Canada. During this global slowdown economies usually just get more mercantilist so China hatred is on the rise And NXY being a bigger asset is obvious, when was the last time China bought 100% of any foreign company bigger than $10b?I lost the article but I saw a lot of categories where this was one of the largest deals in a long time
Actually, here is the article http://blogs.wsj.com/deals/2012/07/23/cnooc-nexen-where-the-15-1-billion-deal-ranks-in-history/
It seems that lots of different bankers advised Cnooc and Nexen to go ahead, they believe they have found a loophole, buy 100% of a company that doesn't do a lot of business in their home country(only part) and get all the foreign assets using the excuse 'well, this is a canadian company'. This would probably work in small companies, but for $15B with the US involved?Its a gamble, the bankers are getting paid either way. Given where the stock is at there is not a lot of margin to be wrong for longs
Just had a look at NXY option chains, and your risk would be lower than 7% even with december puts. How long has the regulator to oppose this deal ?
I read they have something like 60 days to give the result with the option to extend for another 30 days. But this is for the Canada regulators, other countries might be different
Prime Minister says Nexen deal will be scrutinized, Calgary Herald reports :theflyonthewa How often do you see the president or prime minister mention M&A plays?I shorted some NXY after the often
I choose the stock vs options because there is a decent chance the market will get scared at some point allowing me to cover at a profit at a point where I believe the spread more correctly prices the risks. OTM options don't give me that
Darkhorse - fair enough, let's all just bury the hatchet and get back to trading discussions then. Apologies for any misunderstanding.