Strathcona Energy, Canada, sweetens MEG Energy's bid to top Cenovus
Strathcona Resources, a Canadian oil and natural gas company, increased its bid for MEG Energy Monday in an attempt to surpass Cenovus Energy.
MEG's Christina Lake project is one of Canada's most prized assets in the energy sector. Its long reserve life, its low operating costs, and the significant growth potential it offers make it one the last large-scale oil patch expansion opportunities.
MEG's Board has approved Cenovus offer to combine Christina Lake with Cenovus adjacent assets. This would create one of Canada's biggest oil sands producer with a daily output of over 720,000 barrels.
Strathcona would become a large pure-play oil sands company with the size and visibility of larger competitors if it signed a deal MEG.
Strathcona's revised offer values MEG shares at C$30.86, which is higher than the C$27.79 valuation in Cenovus’ August cash-and stock agreement. Strathcona's initial hostile bid, made in May, valued MEG at C$23.27 a share.
According to calculations, the new offer expires October 20 and gives MEG a value of approximately C$7.85billion ($5.68billion) in equity.
Strathcona has built its position at MEG with the help of Waterous Energy Fund. The firm disclosed that it controls or owns about 14.2% shares.
The company said it will vote against Cenovus at a shareholder meeting on October 9, where a two-thirds majority is required.
Strathcona branded the Cenovus transaction "lopsided", and MEG's Board of Directors was accused of running "a broken sale process" which excluded MEG’s earlier overtures.
Cenovus shareholders have seen a gain of nearly C$3.9billion in market value since the deal was announced last month. MEG investors, however, only saw a limited increase.
Cenovus and MEG didn't immediately respond to requests for comment.
(source: Reuters)
