Cenovus increases its offer for MEG Energy to $6.2 billion

Cenovus Energy sweetened Wednesday its offer to purchase MEG Energy. The deal's value, including debt, was raised to C$8.6 Billion ($6.16 Billion), in an effort to compete with a rival offer from Strathcona Resources.

Cenovus increased its offer by C$2.35 per share to approximately C$29.80, and stated that this was their "best and last" offer. Strathcona revised its offer to C$30.86 a share last month.

The fight for MEG, Canada’s last major pure-play oil-sands company highlights the trend of domestic consolidation that has been going on in Canada's oil-sands industry. After foreign companies largely left the industry over the past decade, a few large Canadian firms now control most of this play.

MEG's Christina Lake Oil Sands Project has become one of MEG’s most prized assets, thanks to its long reserve lifespan, low operating cost and significant production growth potential. It is also one of few large-scale opportunities for expansion.

Cenovus has also amended the standstill agreement with MEG to allow Cenovus up to 9,9% of MEG shares to be purchased before the merger vote.

The shareholders meeting was postponed from October 9 to Oct. 22, to give investors more time to examine the amended proposal.

MEG Energy last month urged its shareholders to reject Strathcona's takeover offer, saying that the offer was "fundamentally unattractive" and reiterated its support for Cenovus.

(source: Reuters)