British Gas Revives Bid In Canadian Firm
LONDON (AP) _ British Gas PLC said Monday it has offered 837 million Canadian dollars, or about $644 million, to boost its stake in Canadian oil and gas producer Bow Valley Industries Ltd.
But the proposed deal, which would raise British Gas’ 5 percent interest to 51 percent, sidesteps the need for Canadian regulatory approval because it restricts its stake in voting stock.
A previous offer for the Calgary, Alberta-based company worth 940 million Canadian dollars, or about $723 million, lapsed in November due to the stock market crash and after speculation the deal would be blocked by Investment Canada, a regulatory body that oversees foreign investment in Canada.
British Gas said the lowered price takes into account the worldwide collapse in the stock markets.
The latest deal restricts British Gas’ stake in Bow Valley’s voting stock to 33 percent to satisfy Canadian regulatory authorities, British Gas said. The Canadian government limits to 33.33 percent holdings by foreigners in healthy Canadian energy companies.
Investment Canada has confirmed that the proposed transaction is not subject to review under the Investment Canada Act and therefore does not require its approval, British Gas said.
Under the deal, British Gas will pay 517 million Canadian dollars, or $398 million, for non-voting convertible preferred shares in Bow Valley representing the equivalent of 28.7 million ordinary shares at a price of 18 Canadian dollars, or $14, each.
British Gas also will acquire 16 million ordinary shares with voting rights from existing shareholders at 20 Canadian dollars, or $15, per share.
British Gas said it will be entitled to nominate a majority of Bow Valley directors at the company’s 1988 annual shareholders’ meeting.
The agreement also contains provisions that provide British Gas with the level of management control ″appropriate to its investment in the equity of Bow Valley,″ British Gas said.
Under the previous offer, made in early October before the stock market crash, British Gas would have gained control of 51 percent of Bow Valley’s voting shares. But it involved a price of 20 Canadian dollars, or $15, per share for the new shares and valued the existing ordinary shares at 24 Canadian dollars, or $18.50, each.