Nova Chemicals shares soar 290% on takeover deal

Shares of Calgary-based Nova Chemicals Corp. shot up nearly 300 per cent in Monday trading after the company announced it would be acquired by International Petroleum Investment Co.

Including assumed debt, the takeover deal is worth $2.3 billion US.

International Petroleum, which is owned by the government of the Emirate of Abu Dhabi, is offering $6 US a share in cash for Nova.

Based on an exchange rate of $1.2541, the offer is worth about $7.52 Cdn per share. The actual Canadian dollar amount will be based on exchange rates when the deal closes.

On the TSX, shares of Nova — which started the day at $1.66 — closed at $6.49.

The friendly takeover is a financial lifeline for the firm, which had seen its stock retreat from $30 a share last September to under $2 over worries about the company's ability to cope with its debt load.

As part of the deal, International Petroleum has agreed to provide a $250 million US credit backstop facility to give Nova sufficient liquidity.

"The opportunity to join [International Petroleum] comes at a good time for [Nova] and will enable us to offer both stability and long-term growth to many of our stakeholders," said Jeff Lipton, the company's CEO, who will retire from the post on May 1 as previously announced.

"PIC is well financed and has a track record of working successfully with companies like ours."

Nova generates approximately 45 per cent of its revenue in the United States, 35 per cent of its revenue in Canada, and the remaining 20 per cent in Europe and elsewhere. In the fourth quarter, the company lost $214 million US as writedowns and lower revenues hit the bottom line.