Abu Dhabi National Energy Co., the state-controlled power generator and oil producer, has agreed to buy Canada's PrimeWest Energy Trust for about $4 billion in the biggest-ever North American takeover by a United Arab Emirates company.
Persian Gulf states, flush with cash from burgeoning oil revenue, are buying overseas assets at a record pace. PrimeWest, based in Calgary, Alberta, would be Abu Dhabi National's sixth overseas acquisition since November.
The deal would give Abu Dhabi National, also known as Taqa, daily production of oil and gas equivalent to more than 61,000 barrels of oil in Canada and the United States, the companies said in statement yesterday.
"Taqa is very much fulfilling the Abu Dhabi government's policy of diversifying its assets in other regions of the world," said Philipp Lotter, senior analyst at Moody's Investors Service in Dubai. "This deal fits the profile of their recent acquisitions in Canada."
Taqa will pay about $26.75 each for PrimeWest's outstanding units and exchangeable shares and will assume about $1 billion in the income trust's debt, raising the total value of the deal to $5 billion, PrimeWest spokesman George Kesteven said. The cash portion represents a 34 percent premium to PrimeWest's closing price Friday.
PrimeWest assets include properties in Montana, North Dakota and Wyoming. The deal is unlikely to spark the furor caused by the planned purchase by Dubai World's DP World unit last year of six U.S. port terminals through its acquisition of London-based Peninsular & Oriental Steam Navigation Co., said Eckart Woertz, chief economist at the Gulf Research Center in Dubai.
"Oil clearly is a strategic industry, but after the problems DP World had with P&O;, Gulf investors did take heart to see Sabic get clearance to buy GE Plastics in the energy and chemicals sector," Woertz said in an interview.
Saudi Basic Industries Corp., or Sabic, the biggest chemicals maker by market value, completed the $11.6 billion purchase of General Electric Co.'s plastic division Aug. 31.
"The U.A.E. is an ally of the U.S.," Woertz said. "The U.S. Navy uses U.A.E. ports, and along with other oil exporters the U.A.E. finances the U.S. deficits."
Canadian Industry Minister Jim Prentice said the transaction "will be reviewed, as others would, under the Investment Canada Act."
Taqa chief executive Peter Barker-Homek said last month that the company could spend $3 billion over the next 12 months to more than double production and reserves from the Canadian oil and gas business it bought from Pogo Producing Co. The acquisition of PrimeWest would give Taqa proved and probable reserves equivalent to 285 million barrels of oil.
Taqa agreed Aug. 23 to buy Pioneer Natural Resources Co.'s assets in Canada for $540 million and, earlier in the month, completed its $2 billion acquisition of Pogo's Canadian unit, Northrock Resources Ltd. The Pogo unit has proved reserves equivalent to 142 million barrels of oil.
"Further acquisitions will come, and certainly Canada is an area where we actively are looking for new opportunities to grow the business to get to scale," Barker-Homek told reporters.