Strathcona Resources on Friday abandoned its takeover bid for MEG Energy, ending its months-long battle with Cenovus Energy for the ownership of one of Canada’s last large pure-play oil sands company.
The move by Strathcona, which is a majority stakeholder in MEG, comes after Cenovus earlier this week raised its bid to C$8.6 billion ($6.17 billion), including debt.
Cenovus termed its revised C$29.80 per share bid as its “best and final” offer. In comparison, Strathcona’s revised offer last month valued MEG at C$30.86 per share.
Strathcona said on Friday as a result of the revised deal between MEG and Cenovus, and certain actions, taken by MEG makes “an improved offer for MEG impractical and not in the best interests of Strathcona shareholders.”
The takeover saga began in May when Strathcona launched a C$5.93 billion ($4.29 billion) hostile bid for MEG. However, Cenovus countered with a C$7.9 billion cash-and-stock offer. Since then, Strathcona has raised its stake in MEG to 14.2%.
MEG’s board had repeatedly urged shareholders to reject Strathcona’s bid, calling it “fundamentally unattractive,” and reaffirmed its support for Cenovus’s offer.
MEG’s Christina Lake oil sands project remains a coveted asset for its long reserve life, low operating costs and potential for production growth.
It is one of the few large-scale expansion opportunities in Canada’s oil sands that is now dominated by a small group of domestic players after most foreign companies exited over the past decade.
Source: Reuters.com