Strathcona Waterous is confident in MEG Energy's response to the sweetened offer

The Strathcona Resources executive chair is confident that his sweetened bid to purchase MEG Energy, which is expected to be made by Monday, will win a heated bidding battle.

Calgary-based MEG Energy said that it would respond to Strathcona's revised offer made earlier in the week for the acquisition of the company. Strathcona is Canada's only remaining pure-play producer of oil sands. MEG Energy must decide if Strathcona’s new offer is better than the agreement it already has with Cenovus Energy. Cenovus would have to increase its offer if Strathcona wins the bid, which values MEG's shares at C$30.86 each, higher than the C$27.79 value of the August cash-and stock agreement.

Adam Waterous, Strathcona CEO, said in an interview with the Strathcona News on Thursday that he had received positive feedback from MEG's shareholders after increasing their offer.

Waterous stated that MEG shareholders have expressed their dissatisfaction with the MEG Board deal.

Cenovus CEO Jon McKenzie said to Bloomberg News on Tuesday that the company did not intend to increase its bid for MEG.

Waterous stated that "given the fact Cenovus has said they won't increase their offer, the MEG Board will have to do a legal backflip to continue to consider the Cenovus bid superior to Strathcona and not terminate the agreement with them." Strathcona's initial hostile bid, made in May, was C$23.27 a share. Cenovus offers a mix of cash and stock, while Strathcona offers an all-stock offer. Waterous says this gives MEG shareholders the best chance to benefit from future growth. MEG's Christina Lake project is one of Canada’s few major expansion opportunities. Cenovus would merge MEG's Christina Lake operation with Cenovus adjacent assets to create one of Canada's biggest oil sands company producing more than 720,000 barges per day. Strathcona is a smaller oil company, owned by Waterous Energy Fund. It has built up its stake in MEG and disclosed that it controls or owns 14.2% of the shares. Waterous' fund has announced that it will vote against Cenovus at the MEG shareholder meeting on October 9, where a two-thirds majority is required. (Reporting from Amanda Stephenson, Calgary; editing by Niall Williams)

(source: Reuters)