MEG Energy suspends the shareholder vote on Cenovus' offer, citing a regulatory inquiry

MEG Energy's board has postponed the expected shareholder vote on Thursday regarding a Cenovus Energy buyout. The board said that a regulatory investigation had prompted them to need more information. MEG Energy's board chairman James McFarland announced that the vote on the sale will be held on November 6, instead of ending a long-running bidding war for Canada's only pure-play oil-sands producer.

Cenovus consented to the adjournment, he explained, which will allow MEG to disclose information about an asset deal announced on Monday between Cenovus, a former rival bidder, and Strathcona. Cenovus announced Monday that it had entered into an agreement to support voting with Calgary-based Strathcona. Strathcona owns 14.2% in MEG, and had indicated previously that it would vote against Cenovus. Strathcona agreed to purchase Cenovus' Vawn thermal project in Saskatchewan, as well as certain undeveloped land in Saskatchewan and Alberta, for C$75,000,000 ($53.5,000,000) at closing in cash, as well as additional contingent payments up to C$75,000,000. Cenovus, who launched a hostile offer for oil sands producers MEG back in May, and Strathcona were locked in a months-long bidding war. Strathcona gave up its pursuit of Cenovus after Cenovus increased its offer price in the first week of this month. Analysts said that the agreement between the former rivals could push Cenovus to a level of support well above the 66% needed by MEG shareholders for their bid. Last week, three MEG shareholders said they filed complaints with Alberta Securities Regulator over what they viewed as the board's attempts to tilt the sale process in Cenovus’s favour.

The spokesperson for the Alberta Securities Commission refused to comment.

(source: Reuters)