Cenovus Energy Inc. has put forward a cash-and-stock proposal to acquire MEG Energy Corp., emphasizing its premium value and stability compared to a competing all-stock bid from Strathcona Resources Ltd.
In a detailed presentation, Cenovus highlighted its strengths, including scale, top-notch industry experience, high-quality assets, immediate growth prospects, revenue diversification, a robust balance sheet, and clear synergies. The company’s offer consists of 72% cash and 28% stock, with an implied value of $28.44 per share, representing a significant 39% premium over MEG’s mid-May trading price.
On the other hand, Strathcona recently revised its hostile bid to 0.80 of its shares for each MEG share not already owned, valuing it at $30.86 per share, up from the initial $28.02. Cenovus has voiced concerns over potential downsides in Strathcona’s proposal, citing risks of share price decline post-acquisition and labeling Strathcona’s current share value as inflated.
The MEG board unanimously favors Cenovus’ proposal over Strathcona’s, deeming the latter as unappealing. Strathcona, however, has criticized the Cenovus deal as unequal and accused MEG’s board of inadequately considering its offer.
Cenovus’ bid is subject to approval by a two-thirds majority vote of MEG shareholders, scheduled for October 9. Despite Strathcona’s 14.2% stake in MEG, it plans to vote against the acquisition. Both Cenovus and MEG operate oilsands properties near Fort McMurray, Alberta, with Strathcona also having interests in the same region.
