The following summary is an industry segmented example of a CFIUS-reviewed transaction. Please refer to the 5/23/11 post for more information on this survey.
On December 9, 2010 Algonquin Power & Utilities Corp. of Oakville, Ontario announced that it had agreed to acquire Energy North Natural Gas, Inc. Energy North Natural Gas is a regulated natural gas utility, doing business as KeySpan Energy Delivery New England, and is based in Boston. The transaction agreement makes CFIUS clearance a “Seller Required Regulatory Approval.” Receipt of the clearance is a condition to closing. The transaction is expected to close in the third quarter of 2011. Given the usual time required for industry regulators to review the acquisition process, the CFIUS process should not delay the transaction. The filing is an important precedent in that it demonstrates that these parties considered natural gas distribution to have national security implications sufficient to warrant a CFIUS filing.
Chesapeake Energy Corp., headquartered in Oklahoma City, Oklahoma, the second-largest producer of natural gas and the most active driller of new wells in the U.S., entered into two transactions in the first quarter of 2011 that are expressly subject to CFIUS review. On January 30, 2011, Chesapeake announced an agreement with CNOOC Limited of Hong Kong for CNOOC’s purchase of a 33.3% undivided interest in Chesapeake’s 800,000 net natural gas and oil leasehold acres in northeast Colorado and southeast Wyoming. As a result of the transaction, CNOOC became Chesapeake’s partner in the development of this project. CNOOC 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. As announced, the transaction was subject to customary conditions, including a filing with CFIUS. On February 17, 2011, CNOOC announced the completion of its investment. This timeline suggests that CFIUS approval, if undertaken as announced, was completed within 18 days after announcement of the transaction.
On February 21, 2011, Chesapeake Energy also announced the agreement by one of its subsidiaries to divest certain of its properties to a U.S. subsidiary of BHP Billiton Limited of Australia, a global leader in the resources industry. The subject of the divestiture was Chesapeake’s interests in approximately 487,000 net acres of natural gas producing properties and related assets in central Arkansas. Chesapeake’s SEC filing that reported the agreement stated that its closing was subject to conclusion of a review of the transaction by CFIUS and a finding of no unresolved national securities concerns. Chesapeake did not file the purchase agreement with the SEC, so the exact wording of the condition is not available. On March 31, Chesapeake announced that the divestiture had closed. The timing from the announcement to the closing suggests that, if the parties had made their filing, the CFIUS review would have taken, at most, 40 days.
The following post will address transactions relating to securities exchanges and trading platforms.