(Bloomberg) — Canada’s Cenovus Energy Inc. increased its takeover bid for rival MEG Energy Corp. one day before MEG investors were due to vote, signaling that the companies’ original deal didn’t have enough shareholder support.
The new cash-and-stock offer from Cenovus values MEG at C$29.80 per share, or C$7.6 billion ($5.4 billion), based on Tuesday’s closing price. That’s a bump of about 5% from the previous offer, which the MEG board agreed to in August.
Cenovus is also offering more stock this time: the new proposed transaction is half shares, half cash. The previous bid would have paid shareholders three-quarters cash, and was criticized by some investors for limiting the potential upside for MEG investors.
MEG’s largest shareholder is Strathcona Resources Ltd., which owns 14% of the company and has put forward its own competing all-stock takeover proposal, which MEG’s board turned down.
The MEG shareholder vote has been delayed until Oct. 22.
A takeover of MEG, which operates a single oil-sands site that produces about 100,000 barrels a day of crude, would position Cenovus as a dominant player in the Christina Lake region of Alberta. Cenovus’s upstream production was about 832,000 barrels of oil equivalent per day in the third quarter.
