This past weekend China energy company Sinopec International Petroleum Exploration bid Cdn$2.2 billion for the outstanding shares of Daylight Energy Ltd.  Daylight is a former Oil & Gas Trust that converted to a corporation.  It holds a portfolio of natural gas properties in Canada’s Provinces of British Columbia and Alberta.

An important differentiator that marks this bid, which is for $10.08 per share (a 120% premium to last Friday’s closing price of $4.59), is that this bid is a direct 100% bid by a Chinese corporation for a Canadian company.  To date, Chinese acquisitions in Canada have occurred in circumstances where the target was in financial difficulty, or for only small percentages of companies.

Because the Daylight transaction price is over the Cdn$299 million 2010 Investment Canada Act threshold, a review by the Canadian Federal Minister of Industry will be completed in the next 45 days to determine whether or not the acquisition will be allowed to proceed.  To some degree, I think this is ‘crunch time’, as if the transaction is allowed it strikes me as being large enough to be to some degree precedent setting.  I will be surprised if Washington does not do more than simply act as an observer in this.

I will be following this transaction as it progress over the next month and a half, and will comment further in these e-mails on it.  You can read about this transaction in an article titled ‘Sinopec bids $2.2 billion for Alberta energy company’ – reading time 4 minutes.

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