Alberta court approves US$4.2B takeover of PetroKazakhstan by China oil firm

UncleSam

CALGARY (CP) - An Alberta court has approved the $4.2-billion US takeover bid for PetroKazakhstan Inc. by China National Petroleum Corp. - China's biggest offshore acquisition yet.

The written decision handed down by Justice Neil Wittmann of the Alberta Court of Queen's Bench ends a tug of war between China and Russia over the Canadian company, all of whose operations are in the central Asian republic of Kazakhstan.
" ?2 W* ^! Z' \  L% g3 W) m% u
8 Y8 q, G. n" t1 p4 D* eLate Wednesday, PetroKazakhstan announced the closing of the deal.

"We are delighted that the process which we started several months ago has been successfully concluded," said Bernard Isautier, chairman, president and chief executive officer of PetroKazakhstan.

"CNPC has acquired a business full of opportunities and with high calibre employees. We wish them future success in Kazakhstan," he said in a release.

  @5 C: ?$ |% V: O& ?PetroKazakhstan said its shareholders will receive payment for their shares from Computershare Trust Company of Canada within the next few days.

The release also said that PetroKazakhstan has applied to delist its shares from trading on stock exchanges in Toronto, New York, London, Frankfurt and Kazakhstan.
/ S4 m  m7 ~- R4 d  ]# e
The court ruling quashed a bid by Russian oil giant Lukoil to delay the offer from China's largest oil company. Lukoil argued that it had right of first refusal to buy PetroKazakhstan's stake in Turgai Petroleum, a joint venture holding one-fifth of the Canadian company's reserves.

. q# }  M: Q1 y6 L% H. @0 {The Russian company, whose joint-venture relations with PetroKazakhstan have been increasingly unpleasant, said Tuesday it would match the Chinese offer if the Alberta court declined to approve the China National Petroleum Corp. transaction.
/ J" u, q1 ^3 T' |  l8 q
"Now from a shareholder's point of view this should be done, barring any unforeseen speed bumps in front of us," said energy analyst Martin Molyneux of FirstEnergy Capital Corp. in Calgary before the closing was announced.
+ p$ [  m$ i! \" ~0 l" C7 Y! i4 K
"The government of Kazakhstan seems to be on board, the Chinese are all squared away and the Chinese and the Kazakhs have done their own deal, so the only disillusioned party that I'm aware of is Lukoil," he said.
/ K$ h) R0 {) b3 \  ]( T3 ]4 Q2 Q1 k; U
Lukoil had only itself to blame for missing out on the PetroKazakhstan deal said Molyneux, adding the last-minute offer wasn't really an offer at all.

"I think it was just a saving-face exercise. Lukoil is looking kind of sloppy at the moment and they ended up losing what should have been a very competitive process between them and the Chinese," Molyneux said.

PetroKazakhstan stockholders voted 99 per cent Oct. 18 to accept CNPC's offer of $55 US per share in cash.

The company, formerly Hurricane Hydrocarbons, has been working in Kazakhstan for eight years and owns a major refinery as well as oil reserves estimated at 550 million barrels.
0 g& K% O$ w4 p9 X
The purchase by a unit of state-owned China National Petroleum is seen as a coup for Beijing in its effort to secure energy supplies for the booming Chinese economy.
9 {. T, T1 K) {0 u. e2 K# o+ a/ H( r
China has been acquiring other oil and gas assets in Sudan, Venezuela and Australia, and PetroKazakhstan enables it to tap Central Asian oil.
! m1 Q! c2 j4 w. F) G1 f
& X  |- q! B, L8 }$ yA pipeline between the two countries is under construction.
* b: w7 H, l; A" m% z8 L
Other major oil companies had also expressed interest in PetroKazakhstan (TSX:PKZ - news), including a joint venture led by India's ONGC Videsh.
0 P+ _* F& c  m: v
CNPC's purchase follows a failed bid by China National Offshore Oil Corp. to buy California-based Unocal Corp. in the face of opposition from American politicians.

  f, ?3 r% j7 u! H% O) [0 D3 WChina's biggest foreign acquisition to date has been Lenovo Group's $1.75-billion-US purchase of International Business Machines Corp.'s personal computer business earlier this year.
- J- A3 N5 N; X  }2 H; W9 ^) M
$ g; @5 M( R  L4 e0 b6 s& PPetroKazakhstan shares edged up 26 cents to close at $64.25 in trading on the Toronto stock market.