In a bid to gain control of MEG Energy Corp., Strathcona Resources Ltd. has revised its hostile takeover offer to be solely stock-based, challenging Cenovus Energy’s cash-heavy proposal. The updated offer from Strathcona now values MEG shares at $30.86 each, up from the previous bid of $28.02 per share, offering 0.80 of a share for every MEG share not already owned.
On the other hand, Cenovus Energy has presented an offer allowing MEG shareholders to opt for either $27.25 in cash or 1.325 Cenovus common shares per MEG share, with specific limitations in place. Strathcona has criticized the Cenovus deal as “lopsided” and labeled MEG’s board’s acceptance of the offer as part of a “broken” sale process.
Adam Waterous, the executive chairman of Strathcona, expressed disappointment in MEG’s board for potentially leaving significant returns for shareholders on the table by favoring the Cenovus deal. Waterous highlighted the contrasting outcomes of the two proposals, emphasizing the significant stock market value increase experienced by Cenovus following the announcement of its deal with MEG.
Under the Strathcona bid, MEG shareholders would hold a 43% stake in the combined entity, offering a different approach compared to Cenovus’s proposal. The revised offer from Strathcona is set to expire on October 20, with no immediate comments provided by MEG or Cenovus on the matter.
Waterous reassured his commitment to the deal, addressing concerns about his fund’s stake in MEG post-acquisition. Meanwhile, MEG shareholders are expected to vote on Cenovus’s offer on October 9, with Strathcona indicating its intent to vote against the deal with its 14.2% interest in MEG.
Waterous raised doubts about the satisfaction of MEG shareholders with the Cenovus deal, suggesting potential repercussions for the board’s handling of the situation. Both Cenovus and MEG operate in close proximity in the oilsands region, with Strathcona also having operations in the area, providing strategic alignment opportunities.
In the market, MEG shares saw a 2% increase to $28.93, while Cenovus stock dipped slightly to $22.02 and Strathcona shares fell to $37.80.