The Kuala Lumpur-based giant Petroliam Nasional Bhd, has agreed to buy Canada’s Progress Energy Resources in a deal worth $4.6 billion.
Petronas has offered C$20.45 per Progress share, a 77% premium on their closing price on Wednesday.
The deal will give Petronas control of vast shale gas reserves in Canada.
Including debt, Petronas is paying 23 times earnings before interest, taxes, depreciation and amortization. That’s 66 percent more than the average of 10 comparable deals announced since 2003, according data compiled by Bloomberg.
It is the first instance of an Asian investor launching a buyout of its Canadian partner in a gas project.
“It is a rich deal when you just look at the premium paid, but I think Progress was generally undervalued in the market to begin with,” said Brook Papau, analyst at ITG Investment Research in Calgary.
Papau wrote in a report last month that Progress’s untapped potential, with thousands of drilling locations over the next 15 years, made it ripe for takeover.
With the acquisition, Petronas will build on its position in liquefied natural gas. The Malaysian company will combine its Canadian operations with those of Progress Energy, keeping all of that company’s employees on board.
Petronas also said it plans to build a liquefied-natural-gas export terminal in Prince Rupert, British Columbia, off Canada’s western coast—the fourth major LNG export project under consideration for the country.