The Abu Dhabi state-owned International Petroleum Investment Co yesterday agreed to buy Nova Chemicals Corp in a frindly deal, Canada's largest chemical maker, for $499 million, gaining its first assets based outside Europe and Asia.

The Abu Dhabi energy company will pay $6 a share for Nova, a 261 per cent premium to the 20 February closing price, and the total deal, including debt, is valued at $2.3 billion.

However, the deal will first have to pass the scrutiny of the Canadian government. Industry minister Tony Clement told reporters that Ottawa is legally bound to review the transaction to see if it offers a benefit to the country. "I have a statutory responsibility to review that takeover, which I will be doing, and I will be doing it using the net benefit to Canada test," he said.

The transaction follows other IPIC investments valued at more than $2 billion in the past 18 months, including stakes in EDP-Energias de Portugal SA, Portugal's biggest electricity company, and MAN AG's Ferrostaal, a German oil-services company.

Its purchase of Nova, which makes polyethylene for bags and bottles as well as plastic for car parts, adds to holdings in Austria's OMV AV and Spain's Compania Espanola de Petroleos SA.

''This acquisition will provide enhanced balance sheet strength for Nova Chemicals and facilitate Nova Chemicals' growth internationally,'' Khadem Al Qubaisi, IPIC managing director, said in a statement. ''We can provide stability and allow Nova Chemicals to meet its operational and financial requirements while continuing to expand and invest in its business.''

Nova, which is incorporated in Calgary and run from Pittsburgh, said its board approved the transaction. Investors will meet in April, when the deal will need the approval of at least two-thirds of voting shareholders.

The Nova purchase will extend IPIC's reach beyond the Atlantic, giving it control of manufacturing plants in Ontario, Alberta, Pennsylvania, Ohio and Chile as it makes financing available to the Calgary-based company. IPIC will provide a $250 million credit backstop facility and allow Nova to operate as an independent company.

Nova lost $214 million in the fourth quarter as sales tumbled 36 per cent, the biggest decline in eight years, because of weak demand and plunging prices for plastic resins.

Nova's credit rating was reduced this month by Moody's Investors Service and Standard & Poor's amid concern the company wouldn't be able to obtain the financing required by lenders. S&P rates Nova corporate debt CCC+, seven levels below investment grade, and Moody's rates the company B2, five levels below investment grade.