CDN NEWS | 
US NEWS 
(Reuters) – Canadian oil sands producer MEG Energy on Monday urged shareholders to reject the sweetened takeover bid from its majority stakeholder Strathcona Resources and reaffirmed support for sale to Cenovus Energy.
“The revised Strathcona offer remains fundamentally unattractive,” said James McFarland, chair of MEG’s board, citing exposure to inferior assets, an overvalued Strathcona share price and governance risks.
The battle for Canada’s last major pure-play oil sands company highlights a consolidation, leaving the sector dominated by few big Canadian players following the pullback of foreign firms over the past decade.
MEG’s Christina Lake oil sands project has become a prized asset, with its long reserve life, low operating costs and significant potential for production growth, making it one of the few large-scale expansion opportunities.
The takeover saga began in May when Strathcona launched a C$5.93 billion ($4.29 billion) hostile bid for MEG Energy. However, Cenovus countered with a C$7.9 billion cash-and-stock agreement to acquire MEG.
Since then, Strathcona has raised its stake in MEG to 14.2%, aiming to vote against the Cenovus deal, and earlier this month sweetened its original offer to C$30.86 per share, compared with Cenovus’ nearly C$28 bid.
“The Special Distribution described in the Revised Strathcona Offer results in a weaker balance sheet and increased financial risk for the combined company compared to the Initial Strathcona Offer”, the company said in a statement.
Earlier this month, Strathcona announced plans for a C$2.14 billion special distribution to shareholders in the fourth quarter, equating to about C$5.22 per share if their sweetened bid is successful.
Cenovus CEO Jon McKenzie told Bloomberg News last week the company does not plan to raise its offer for MEG despite Strathcona’s higher bid.
MEG shareholders are expected to vote on the Cenovus deal on October 9.
Strathcona Resources did not immediately respond to a Reuters request for comment.
($1 = 1.3822 Canadian dollars)
Reporting by Tanay Dhumal in Bengaluru; Editing by Vijay Kishore
Share This:
