Brokerages Cheer Cenovus’ C$7.9 Billion Deal for MEG Energy

(Reuters) –

• Brokerages welcome Cenovus Energy’s C$7.9 billion ($5.72 billion) cash-and-stock deal to acquire peer MEG Energy
• Gerdes Energy Research raises PT on CVE by C$2 to C$32, a premium of 51.2% to stock’s closing price on Friday
• The deal will give “an approximate 6% improvement in oil sands capital intensity,” Gerdes said
• Brokerage Desjardins raises PT to C$29 from $C27.5, a ~37% upside to last close
• “While the transaction would be modestly dilutive, reflecting CVE’s depressed valuation, we view the consolidation of Christina Lake as a strategic masterstroke” – Desjardins
• Brokerage believes CVE is well-positioned to surpass the ~C$400m of identified synergies while delivering top-decile capital efficiencies
• ATB Capital Markets raises its PT to C$28 from C$25
• 16 out of 17 brokerages rate the stock “buy” or higher and 1 “sell”; their median PT is C$26.5 – data compiled by LSEG
• As of last close, CVE shares up 4.1% YTD

Reporting by Sumit Saha in Bengaluru

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