Strathcona Resources sweetens takeover offer for MEG Energy
The battle for control of MEG Energy Corp. continues to heat up, as two competing offers from Cenovus Energy and Strathcona Resources Ltd. are now on the table. Cenovus has put forth a friendly cash-heavy offer, while Strathcona has restructured its bid to be entirely based on stock.
Strathcona’s latest offer, announced on Monday, consists of 0.80 of a share per MEG share it does not already own. This revised bid values MEG at $30.86 per share, up from its previous offer of $28.02 per share. On the other hand, Cenovus is offering MEG shareholders a choice between $27.25 in cash or 1.325 Cenovus common shares for each MEG share, with certain restrictions in place.
Adam Waterous, executive chairman of Strathcona, has criticized the Cenovus deal, calling it “lopsided” and accusing the MEG board of accepting an offer that leaves money on the table for shareholders. He emphasized the stark contrast between the two offers, highlighting the potential gains for Cenovus shareholders versus the opportunity for MEG shareholders to stay invested and benefit over time.
The deadline for the new Strathcona offer is set for October 20, adding a sense of urgency to the decision-making process. MEG and Cenovus have not yet commented on the latest developments.
One key concern raised by MEG’s board is the potential for Strathcona’s majority shareholder, Waterous Energy Fund, to sell its stake post-acquisition. Waterous has reassured that he is committed for the long term and is willing to enter into a lockup agreement to prevent any immediate sale of shares.
The final decision rests with MEG shareholders, who are expected to vote on the Cenovus deal on October 9. Strathcona has indicated its intention to vote against the deal with its 14.2% stake in MEG.
The implications of this battle go beyond just the companies involved, as it raises questions about boards of directors’ fiduciary duties and the best interests of shareholders. The outcome of this showdown could have lasting effects on the Canadian oil sands industry.
As the saga continues to unfold, MEG shares have seen a slight increase, while Cenovus and Strathcona stocks have experienced minor fluctuations. The stakes are high, and the final outcome remains uncertain as both parties vie for control of MEG Energy Corp.
