(Bloomberg) — Canadian oil producer Strathcona Resources Ltd. stood by its offer for MEG Energy Corp. after having the $4.1-billion takeover bid rejected by MEG’s board.
“Strathcona firmly believes its offer provides a true win-win for MEG and Strathcona shareholders, uniting two heavy oil ‘pure plays’ into a new Canadian oil champion,” the company said in a statement, adding that it also welcomed a move by MEG’s board to sound out alternative suitors.
Earlier this month, MEG Energy’s board urged investors to reject what it called an “inadequate, opportunistic” bid from Strathcona, saying the offer was too low and harmful to MEG’s share price. MEG’s board authorized the oil-sands producer to begin a strategic review with the potential to find a better offer.
“Strathcona looks forward to participating in the strategic alternatives process, which will also provide an opportunity for MEG’s board to learn more about Strathcona,” Waterous said, flagging what he said were alleged “inaccuracies” in MEG’s circular on the offer.
Waterous is attempting to win over MEG’s shareholders after some of them said the deal he proposed last month undervalued the company. MEG’s board also spurned his earlier approaches, prompting him to take his bid directly to shareholders. Strathcona said it already owns more than 9% of MEG’s shares after buying them through open-market purchases this year.
A takeover of MEG would be the biggest acquisition yet for Strathcona, which former investment banker Waterous built through a flurry of deals over the past decade. The deal would make Strathcona a major heavy crude company, adding MEG’s roughly 100,000 barrels of daily output from its Christina Lake asset to Strathcona’s projected 120,000 barrels a day of production.
Strathcona has forecast C$175 million in cost savings opportunities from combining with MEG, including operating synergies, overhead reductions and interest savings.
