Abu Dhabi state-owned International Petroleum Investment Co launched a $500-million takeover bid for Nova Chemicals Corp on Monday, a friendly deal to rescue the raw plastics maker from severe financial pressure due to its high debt.

Under the deal, IPIC is offering $6 a share for all of the outstanding shares of Nova Chemicals, which is based in Canada but has its executive offices in the Pittsburgh, Pennsylvania.

With assumed debt, the deal is valued at $2.3 billion.

Nova shares surged C$5.14, or 310 percent, to C$6.80 on the Toronto Stock Exchange. Its New York-listed stock soared 300 percent to $5.36.

The stock had been beaten down in recent months by financial weakness in the chemical industry and fears about the company's ability to meet debt obligations.

It won a new $150 million credit facility with Export Development Canada on Sunday, allowing it to meet its commitments.

Nova is known for plants that make ethylene, polyethylene, styrene and its derivatives. The global economic downturn has cut demand for such materials.

Its marquee asset is the Joffre petrochemical complex in central Alberta, one of the world's largest and seen as strategically key due to a low-cost supply of ethane, a building block for ethylene and polyethylene.

Over the past month several bond rating agencies downgraded Nova debt over fears that it may not be able to meet its obligations to lenders. The Alberta government said early this month it would not give Nova the $100 million in funding it needed before March.

The takeover deal will allow Nova to strengthen its balance sheet so it can keep operating and expanding, the firms said. IPIC agreed to a $250 million backstop facility to improve Nova's liquidity, it said.

The opportunity to join IPIC comes at a good time for Nova Chemicals and will enable us to offer both stability and long-term growth to many of our stakeholders, Nova Chief Executive Jeff Lipton said in a statement.

IPIC said Nova's assets, which are in Canada, the United States and Europe will complement its own in Europe, the Middle East and Asia.

The deal marks the latest in a string of Canadian acquisitions for Abu Dhabi companies, although most have been in the oil and gas production business.

The deal is subject to holders of two-thirds of Nova shares tendering their holdings to the offer.

($1=$1.25 Canadian)

(Additional reporting by Scott Anderson; Editing by Peter Galloway)

Canada Pennsylvania Japan