SU leaving itself open to a takeoverThe market has slammed the share price of many of the oil producers down by 20% or more, so the pain SU shareholders are experiencing is not unique.
What is somewhat unique is the SH management is embracing the pain and using it to its advantage.
It doesn't take a rocket scientist to figure out that SU is undervalued at this time. If we can figure it out, so can funds whose primary function is to circle when there is blood in the water.
Unlike IPL which bit off more than they could chew with its Heartland project and left itself vulnerable, SU made the difficult choices which put the company on solid ground - except for the South Slope of course :)
On the other hand there is a similarity between IPL and SU in that the management of both companies has exhibited an arrogant attitudes towards shareholders which left both companies severerly undervalued.
Brookfield jumped into IPL when the share price was down and picked up 20% of the company. Now, Brookfied is in a postion to swallow up IPL.
It would take 300 million shares of buying to pick up 20% of SU. With the street walking away from "everything oil" and SU taking a "we don't care" attitude, it wouldn't be too difficult for a fund to pick up 10 million shares or more per week. By the end of the year, a fund could own 20% of SU.
The cost to buy 300 million shares at C$25 per share would be about US$6 billion. There are lots of funds that could write that cheque. Unlike IPL that has a very loyal shareholder base, SU is burning bridges and who knows which way shareholders would vote in a takeover bid.