Abu Dhabi's IPIC to acquire ailing Canadian chemical maker Nova Chem

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.''