Qualitative Assessment on Cnooc Limited and Nexen Inc. Merger

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1) Description of the type of merger and the primary driver (main reason) of CNOOC’s offer to buy Nexen. M&A can be driven by value/synergy, strategy or a combination of the two. The merger between CNOOC Limited and Nexen Inc. is a Vertical Acquisition. Nexen is an independent, Canadian-based global energy company, listed on the Toronto and New York stock exchanges under the symbol NXY. Nexen is focused on three growth strategies: oil sands and shale gas in Western Canada and conventional exploration and development primarily in the North Sea, offshore West Africa and deep-water Gulf of Mexico. Nexen is therefore, an upstream company because it is mainly involved in exploration and production.CNOOC Limited is China’s largest producer of offshore crude oil and natural gas and one of the largest independent oil and gas exploration and production companies in the world. CNOOC Limited’s parent, China National Offshore Oil Corporation ("CNOOC"), the largest offshore oil and gas producer in China, is a mega government owned company operating directly under the State-owned Assets Supervision and Administration Commission of the State Council of the People's Republic of China. The Group, the company CNOOC limited together with its subsidiaries mainly engages in exploration, development, production and sales of oil and natural gas. CNOOC Group evolved from a traditional upstream company to an integrated group of energy-related companies with promising primary businesses and a complete industrial chain. The six main business segments of the Company are oil & gas exploration and development; professional technical services; refining, sales and fertilisers; natural gas and power generation; financial services and alternative energy resources. This suggests that while CNOOC limited itself is a upstream company engaging mainly in exploration and production, there is a

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