By Tanay Dhumal (Reuters) -Cenovus Energy raised its bid for MEG Energy on Wednesday to C$8.6 billion ($6.17 billion), including debt, intensifying a takeover battle for the Canadian oil producer with rival Strathcona Resources. Cenovus raised its bid by C$2.35 to about C$29.80 per share, and said this was its “best and final” offer. In […]
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MEG takeover fight intensifies as Canadian oil producer Cenovus raises bid
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By Tanay Dhumal
(Reuters) -Cenovus Energy raised its bid for MEG Energy on Wednesday to C$8.6 billion ($6.17 billion), including debt, intensifying a takeover battle for the Canadian oil producer with rival Strathcona Resources.
Cenovus raised its bid by C$2.35 to about C$29.80 per share, and said this was its “best and final” offer. In comparison, Strathcona’s revised offer last month valued MEG at C$30.86 per share.
MEG’s board has, however, repeatedly urged shareholders to reject Strathcona’s bid, calling it “fundamentally unattractive,” and reaffirmed its support for Cenovus’s offer.
The latest offer from Cenovus, which follows an earlier statement that its August bid was fair, comes amid a fierce battle for the ownership of one of Canada’s last large pure-play oil sands company.
MEG’s Christina Lake oil sands project remains a coveted asset for its long reserve life, low operating costs and potential for production growth.
It is one of the few large-scale expansion opportunities in Canada’s oil sands that is now dominated by a small group of domestic players after most foreign companies exited over the past decade.
Cenovus also amended its deal structure, shifting to a 50-50 mix of cash and shares, up from 75% cash and 25% stock, giving MEG investors a greater upside in the combined company.
Analysts said the higher offer could trigger a slight near-term negative market reaction for Cenovus but may strengthen support from MEG shareholders over the longer term.
Cenovus’ shares were down 3%, while MEG shares were up 3.8% in morning trade.
The two companies have also revised a standstill agreement to allow Cenovus to acquire up to 9.9% of MEG shares ahead of the merger vote.
MEG’s shareholder meeting has been postponed to October 22 from October 9 to allow investors more time to review the amended proposal.
($1 = 1.3942 Canadian dollars)
(Reporting by Tanay Dhumal and Katha Kalia in Bengaluru; Editing by Shreya Biswas and Shinjini Ganguli)