Suncor Energy Inc T.SU

SU leaving itself open to a takeover

[Obscure1]

The 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.

[Experienced]

Interesting post Personally I don't think that SU is a takeover candidate. That said...your comparison to IPL is noteworthy.  In the case of IPL...the primary ownership was retail whereas with SU it is institutional and so with that factor SU woiuld be an easier takeover target. In your post you mentioned Heartland.  I was a long time holder of IPL but sold before the issues WRT

[Tommy123]

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[Obscure1]

Off the top of my head, Brookfield (IPL) and Birkshire (Dominion Energy) recently. 

[Obscure1]

A couple more companies that have acquired oil assets recently include SU (taking over FSPO  Terra Nova partners and investing in the Grand Banks) and Cenovis (taking over Husky). The pendulum almost always swings too far and eventually swings back the other way.  As time progresses, the world is going to wake up to the fact that changing infrastructure is not as easy as saying "

[Spanito]

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[Co2Harvest]

A lot of people think they care about the environment but their actions say otherwise and they often have no idea or have come to the realization that we have little choice when you think about it from a full lifecycle perspective. Many have been tricked into thinking that buying shares in an oil and gas company is somehow worse than buying products that are made using petroleum, transported using

[Chris007]

Well to be fair, a majority of the population don't think too deeply about their investments, in general...most don't even own individual stocks. ESG funds, are a feel-good solution for a lot people, similar to products like fairtrade coffee. Who wouldn't want to "do good" and make money too? its definitely a powerful value proposition... not surprising that such funds

[Co2Harvest]

Yes, I agree. Not hard at all to see why they have become so popular. I feel pretty good getting cold hard cash from carbon emitters. Better in my pocket than theirs. I wish I could help others see it that way ;)!

[Tommy123]

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[liljohnnyjoke]

many of the other oil companies are down 20% yes, but 52wk or even multi year highs Suncor is down over 20% from $30, where it needed 40% more to get to prepandemic levels, many of the others that have fallen are still at pre pandemic levels

[Chris007]

Well, to be fair, the immediate “pre pandemic” prices of most of the oil companies are not exactly a high water mark, with most being down around somewhere in the ballpark of 60-80% of their pre-2014 oil crash highs. For example some among the midcaps like Baytex, MEG, CPG, ERF (which have done well percentage wise over the last year): -BTE (pre-2014 oil crash high of around 50 bucks…currently

[PabloLafortune]

There is a huge difference between the 2 companies: IPL desperately tried to maintain the dividend until they no longer could - they were hapless. Suncor is desperately trying not to restore the dividend or otherwise increase it even though they easily could - they are ____________ (use your own adjective). They've either totally lost the plot, are overly influenced by the banks, or worse

[Chris007]

Another huge difference is the sheer size difference between of the 2 companies... IPL market cap of Approx $8.6B, EV of ~$15.5B SU market cap of approx $37B, EV of ~$56.3B SU would be a hell of a lot harder to take over by private equity.  If the takeover came from a foreign company (particularly stateowned), that would also have to be subject to federal government regulatory review (who

[Spanito]

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[Experienced]

While I posted earlier that I really don't think SU is in play as takeover candidate, it would seem to me that the most likely candidates would be those investors who engage in leveraged buyouts.  The reason for this is, well, obvious.  SU at current oil prices is a huge cash cow and at current interest rates, a leveraged buyout would make a lot of money especially with a depressed