Malaysia's Petronas is offering $6 billion in its attempt to takeover Progress (TSX:PRQ), but after a detailed review, Industry Minister Christian Paradis refused to approve the transaction.
The minister said Friday that he informed Petronas he was "not satisfied that the proposed investment is likely to be of net benefit to Canada."
Under the Investment Canada Act, Petronas has up to 30 days to make changes to the proposed deal and send it back to Ottawa for another review.
In a statement issued on Saturday, Progress expressed its displeasure at Paradis' decision.
"Progress will be working over the next 30 days to determine the nature of the issues and the potential remedies," said company president and CEO Michael Culbert.
"The long-term health of the natural gas industry in Canada and the development of a new (Liquefied natural gas) export industry are dependent on international investments such as Petronas'."
The federal government has not provided any further explanation on its rejection of the Petronas deal, but Paradis has highlighted Canada's "long-standing reputation for welcoming foreign investment."
"The Government of Canada remains committed to maintaining an open climate for investment," he said Friday.
Progress focuses primarily on natural gas exploration, development and production in northeast British Columbia and northwest Alberta.
A year before their acquisition deal was announced, Progress and Petronas formed a partnership to jointly develop shale natural gas in northeastern B.C. and look at exporting the gas off the West Coast in liquid form.
The government's rejection of the Petronas bid comes as it is in the process of reviewing another Asian takeover offer — China National Offshore Oil Co. is offering $15.1 billion for Calgary-based Nexen Inc. (TSX:NXY).
Observers had been looking to the Petronas review for signals on the Harper government's thinking about the more controversial deal to sell Nexen to a company controlled by China's government.
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