Strathcona Resources Ltd. said it was “disappointed” that the board of MEG Energy Corp. has rejected its amended acquisition offer and chosen to stay with Cenovus Energy Inc’s offer.
Strathcona’s amended offer is to acquire all of the outstanding shares of MEG Energy Corp. for 0.80 Strathcona shares per MEG share, which it called a “clearly superior” offer to Cenovus’ arrangement agreement to acquire MEG in a cash-and-stock transaction valued at $7.9 billion, inclusive of assumed debt, made in August.
The MEG board “has resorted to the same pattern of false and misleading claims,” Strathcona said in a statement.
Strathcona said it “remains encouraged by the strong shareholder support” for its amended offer, which expires on Oct. 20. The company stated it will stick with its plan to vote its approximately 14.2 percent interest in MEG against the resolution to approve the acquisition of MEG by Cenovus, which requires approval by at least 66 and two-thirds percent of the votes cast by shareholders at the special meeting scheduled on Oct. 9.
MEG Energy Rejects Revised Offer
In a separate statement, MEG said that Strathcona filed a revision to the original offer under which MEG shareholders would be eligible to receive a proportionate share of a potential “special distribution” by Strathcona totaling $2.142 billion, subject to various conditions and approvals.
The special distribution, if completed, “does not deliver incremental consideration to MEG shareholders as it would significantly increase the leverage of the combined company and reduce its equity value by $2.142 billion, thereby negatively impacting the price of Strathcona shares that MEG shareholders would receive under the Revised Strathcona Offer,” MEG said.
“The Revised Strathcona Offer remains fundamentally unattractive for MEG shareholders because it fails to address or adequately compensate for the significant risks embedded in Strathcona Shares,” MEG Chair James McFarland said. “MEG shareholders would be exposed to inferior assets, an unproven track record, an overvalued Strathcona share price, significant overhang risk, and governance risk”.
McFarland added, “In contrast, the Cenovus transaction delivers an attractive price, upside potential, substantial cash, and value certainty that MEG Shareholders deserve. The board unanimously recommends that MEG shareholders vote FOR the Cenovus transaction”.
“Through our engagement with MEG Shareholders, we have heard overwhelming acknowledgement of the industrial logic of the Cenovus Transaction,” MEG President and CEO Darlene Gates, said. “We have also heard the majority of MEG institutional shareholders express concerns around acceptance of Strathcona share consideration and the resultant impacts on the trading of the combined company’s shares, with recognition of Strathcona’s inferior asset quality, unproven track record, inflated share price, and the risks associated with WEF ownership”.
Cenovus, in a separate statement, released a presentation that it said highlighted the transaction’s “superior value” for MEG shareholders.
Cenovus said its offer brings “scale, industry-leading experience, tier-1 assets, leading near-term growth, diversified revenues, a stronger balance sheet with clearly defined and unique synergies, offering the opportunity to participate in the value upside of the integrated Christina Lake region”.
In contrast, Strathcona’s shares are the only consideration offered in its revised bid for MEG, and “those shares are illiquid and overvalued relative to peers,” Cenovus said.
Strathcona’s proposal would also “result in Waterous Energy Fund and other Strathcona insiders controlling the combined company, with interests that may not align with MEG shareholders,” Cenovus stated.
To contact the author, email rocky.teodoro@rigzone.com
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
element
var scriptTag = document.createElement(‘script’);
scriptTag.src = url;
scriptTag.async = true;
scriptTag.onload = implementationCode;
scriptTag.onreadystatechange = implementationCode;
location.appendChild(scriptTag);
};
var div = document.getElementById(‘rigzonelogo’);
div.innerHTML += ” +
‘
‘ +
”;
var initJobSearch = function () {
//console.log(“call back”);
}
var addMetaPixel = function () {
if (-1 > -1 || -1 > -1) {
/*Meta Pixel Code*/
!function(f,b,e,v,n,t,s)
{if(f.fbq)return;n=f.fbq=function(){n.callMethod?
n.callMethod.apply(n,arguments):n.queue.push(arguments)};
if(!f._fbq)f._fbq=n;n.push=n;n.loaded=!0;n.version=’2.0′;
n.queue=[];t=b.createElement(e);t.async=!0;
t.src=v;s=b.getElementsByTagName(e)[0];
s.parentNode.insertBefore(t,s)}(window, document,’script’,
‘https://connect.facebook.net/en_US/fbevents.js’);
fbq(‘init’, ‘1517407191885185’);
fbq(‘track’, ‘PageView’);
/*End Meta Pixel Code*/
} else if (0 > -1 && 86 > -1)
{
/*Meta Pixel Code*/
!function(f,b,e,v,n,t,s)
{if(f.fbq)return;n=f.fbq=function(){n.callMethod?
n.callMethod.apply(n,arguments):n.queue.push(arguments)};
if(!f._fbq)f._fbq=n;n.push=n;n.loaded=!0;n.version=’2.0′;
n.queue=[];t=b.createElement(e);t.async=!0;
t.src=v;s=b.getElementsByTagName(e)[0];
s.parentNode.insertBefore(t,s)}(window, document,’script’,
‘https://connect.facebook.net/en_US/fbevents.js’);
fbq(‘init’, ‘1517407191885185’);
fbq(‘track’, ‘PageView’);
/*End Meta Pixel Code*/
}
}
// function gtmFunctionForLayout()
// {
//loadJS(“https://www.googletagmanager.com/gtag/js?id=G-K6ZDLWV6VX”, initJobSearch, document.body);
//}
// window.onload = (e => {
// setTimeout(
// function () {
// document.addEventListener(“DOMContentLoaded”, function () {
// // Select all anchor elements with class ‘ui-tabs-anchor’
// const anchors = document.querySelectorAll(‘a .ui-tabs-anchor’);
// // Loop through each anchor and remove the role attribute if it is set to “presentation”
// anchors.forEach(anchor => {
// if (anchor.getAttribute(‘role’) === ‘presentation’) {
// anchor.removeAttribute(‘role’);
// }
// });
// });
// }
// , 200);
//});
