The board of Total is meeting to consider an offer of up to C$19.7bn for Nexen, the Canadian oil company, FT Alphaville has learnt.
It is understood the French oil company is prepared to offer up to C$38 a share for Nexen, which owns fields in the Gulf of Mexico and the North Sea.
To fund the offer Total has secured a financing package of €7.5bn from five banks - Societe Generale, HSBC, BNP Paribas, RBS and Credit Agricole. Sources said that Total had already paid a commitment fee at a cost of €130m. A formal offer could be made as early as this week, although Total could yet walk away.
Soc Gen is advising Total.
Along the way, Total is said to have considered selling its 13 per cent holding in drug company Sanofi-Aventis if it had proved difficult to secure bank financing for the deal
Total has been stalking Nexen for many months. It looked at an acquisition earlier this year, but concluded Nexen was too expensive. Since June, however, shares in Nexen have lost more than half their value.
Nexen has long been viewed as a natural takeover target for a cash rich oil company looking to expand production.
Its production assets are viewed as well placed and relatively young. The company is also highly cash generative and owns a 7.23 per cent stake in the Syncrude, the world’s largest producer of crude from Canada’s oil sands.
Total, a relatively late entrant to oil sands, has been keen to beef up its presence in that area.
Nexen officials have insisted that the company is not up for sale and that it has an independent future. But an offer close to C$38 a share would test the board’s resolve.
Shares in Nexen were 0.55 cents higher at C$22.40 in early trading in Canada on Tuesday.
A spokesman for Total said it does not comment on market rumours.
Related Links:
Takeover speculation buoys Nexen - FT.com
