Market Chatter: Hedge Funds Led By Paulson Bet on Nexen Offer

By Staff,

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Paulson & Co., the hedge fund run by billionaire John Paulson, and mutual fund firm Franklin Resources Inc. ( BEN ) are among foreign investors betting Canada will approve Cnooc Ltd.'s $15.1 billion acquisition of Nexen Inc. (NXY.TO), according to a Bloomberg report.

It said Paulson & Co., Franklin, Arrowgrass Capital Partners LLP, Mason Capital Management LLC and Eton Park Capital Management LP, all based outside Canada, bought shares in Calgary-based Nexen in the third quarter, regulatory filings show. Ontario Teachers' Pension Plan tripled its stake while T. Rowe Price Group Inc. and Jarislowsky Fraser Ltd. sold, it added.

It said the purchases were made before Canada rejected a C$5.2 billion ($5.2 billion) bid by Petroliam Nasional Bhd. for Progress Energy Resources Corp. (PRQ.TO) on Oct. 19, which cast doubt on the Nexen deal. Nexen shares have risen since, with the spread between China-owned Cnooc's $27.50 offer and shares of the Calgary-based energy company the lowest since Oct. 18 as of Nov. 16, suggesting investors are growing more optimistic the deal will be completed, according to data compiled by Bloomberg.

"Most people believe that Nexen will get completed," said Sachin Shah, a merger-arbitrage strategist with Tullett Prebon Americas Corp. in Jersey City, New Jersey.

Hedge funds that bet on events such as mergers will probably buy more Nexen stock once Hertz Global Holdings Inc.'s ( HTZ ) US$2.6 billion purchase of Dollar Thrifty Automotive Group Inc. ( DTG ) closes and cash is freed up, Shah said last week in a telephone interview. U.S. antitrust regulators approved the acquisition on Nov. 16.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Copyright (C) 2014 All rights reserved. Unauthorized reproduction is strictly prohibited.

This article appears in: Investing Commodities
Referenced Stocks: BEN , DTG , HTZ

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