Nexen Tumbles on Report Total Ditches Takeover Offer

Nexen Tumbles on Report Total Ditches Takeover Offer


By Joe Carroll and Tara Patel

Dec. 3 (Bloomberg) -- Nexen Inc., operator of the North Sea’s Buzzard oil field and Canada’s Long Lake tar-sands project, fell the most in 21 years after The Times of London reported Total SA abandoned plans to acquire the Calgary-based company.

Nexen fell C$2.51, or 10 percent, to C$21.75 on the Toronto Stock Exchange after earlier today dropping as much as 25 percent. The decline wiped out yesterday’s 11 percent gain following an FT Alphaville Web site report that Total was preparing a C$19.7 billion ($15.7 billion) bid for Nexen.

“Although a Total offer for Nexen is within the realms of possibility, we feel it is unlikely,” David Thomas, a London- based analyst at Citigroup Inc., said in a report today. “Hostile approaches have not been in Total’s style and it is our belief that the company would be unlikely to enter into a potential bidding war.”

Paris-based Total dropped 1.5 percent to 38.72 euros. The shares have lost 32 percent this year. The cost of protecting bonds sold by Total from default jumped to a record.

The Times didn’t say where it got its information. Total spokesman Paul Floren declined to comment on the reports.

Total has spent C$1.69 billion in the past three years amassing Canadian oil-sands assets, most recently with the purchase of Synenco Energy Inc. in August.

Indonesia to Brazil

Nexen pumps oil and natural gas from Indonesia to Brazil, and also makes chemicals. The company pumped the equivalent of about 207,000 barrels of crude a day in 2007, about one-twelfth of Total’s output.

Credit-default swaps on Total climbed 47 basis points to 153, according to CMA Datavision prices at 9:15 a.m. in London.

Credit-default swaps, contracts conceived to protect bondholders against default, pay the buyer face value in exchange for the underlying securities or the cash equivalent should a company fail to adhere to its debt agreements. An increase indicates a deterioration in the perception of credit quality; a decline, the opposite.

A basis point on a credit-default swap contract protecting 10 million euros ($12.6 million) of debt from default for five years is equivalent to 1,000 euros a year.

To contact the reporter on this story: Joe Carroll in Chicago at jcarroll8@bloomberg.net
Last Updated: December 3, 2008 16:10 EST