Cenovus Energy Inc. has put forward a cash-and-stock proposal for MEG Energy Corp., emphasizing the benefits of its offer compared to a competing all-stock bid from Strathcona Resources Ltd. Cenovus highlighted its strengths, including scale, top-tier assets, diversified revenues, and synergies, urging MEG shareholders to consider its friendly deal.
Strathcona recently revised its hostile offer to 0.80 of its shares for each MEG share not already owned, increasing the offer’s value to $30.86 per share. In contrast, Cenovus proposed a mix of 72% cash and 28% stock, valuing the bid at $28.44 per share, representing a substantial premium over MEG’s mid-May stock price.
Cenovus raised concerns about potential risks associated with Strathcona’s offer, citing the possibility of a drop in Strathcona’s share price post-acquisition. The MEG board unanimously recommended accepting Cenovus’ offer, deeming Strathcona’s proposal unattractive.
Strathcona criticized the MEG board’s decision, labeling Cenovus’ deal as “lopsided” and accusing the board of failing to adequately consider its bid. Strathcona’s executive chairman pointed out the significant increase in Cenovus’ stock price following the announcement of the deal with MEG.
The final decision rests with MEG shareholders, who are set to vote on the Cenovus offer on October 9, requiring a two-thirds majority for approval. While Strathcona plans to vote against the deal with its 14.2% stake in MEG, both Cenovus and MEG operate in the oilsands region near Fort McMurray, Alberta, with Strathcona also having operations in the area.