- Canadian oil and gas producer Strathcona Resources (TSX:SCR) announced late Thursday its intention to launch a C$5.93 billion takeover bid for rival MEG Energy (TSX:MEG)
- The proposed offer includes 0.62 Strathcona shares and C$4.10 in cash per MEG share, valuing MEG at C$23.27 per share—a 9.3 per cent premium
- MEG’s corporate team clarified that no formal offer has been made by Strathcona
- Strathcona Resources stock (TSX:SCR) last traded at C$30.92 and MEG Energy stock (TSX:MEG) last traded at C$21.30
Canadian oil and gas producer Strathcona Resources Ltd. (TSX:SCR) announced late Thursday its intention to launch a C$5.93 billion takeoverbid for rival MEG Energy Corp. (TSX:MEG), a move that could reshape the landscape of Canada’s oil sands sector.
The proposed offer includes 0.62 Strathcona shares and C$4.10 in cash per MEG share, valuing MEG at C$23.27 per share—a 9.3 per cent premium over MEG’s closing price on May 15. The deal is structured as a hostile bid, following MEG’s rejection of an earlier proposal made on April 28.
If successful, the acquisition would create Canada’s fifth-largest oil producer and the fourth-largest SAGD (steam-assisted gravity drainage) operator, uniting two heavy oil-focused companies with complementary assets and operations in Alberta’s oil sands.
In its response to the bid, MEG’s corporate team clarified that no formal offer has been made by Strathcona and advised shareholders to take no action until its board has had an opportunity to fully review the offer
Strathcona plans to fund the cash portion of the deal through a bridge financing commitment from a syndicate of lenders. The company’s largest shareholder, Waterous Energy Fund, which currently holds 79.6 per cent of Strathcona, has pledged to increase its investment through a new equity subscription, potentially raising its total ownership to over 51 per cent post-merger.
The combined entity would have approximately 379 million shares outstanding and $1.5 billion in net debt, with MEG shareholders expected to own about 37.8 per cent of the new company.
Strathcona emphasized the strategic rationale behind the bid, citing the opportunity to consolidate two high-quality, scale-heavy oil producers with similar reserve life indexes and operational efficiencies.
The offer is not subject to any financing conditions and is expected to formally commence in the coming days.
Strathcona Resources Ltd. is an oil and gas producers with operations focused on thermal oil, enhanced oil recovery and liquids-rich natural gas. The Company has three operations, including Lloydminster Heavy Oil, Cold Lake Thermal Oil and Montney.
Strathcona Resources stock (TSX:SCR) last traded at C$30.92 and has lost 11.78 per cent since this time last year.
MEG Energy stock (TSX:MEG) last traded at C$21.30 and has lost 30.21 per cent since this time last year.
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