MEG Board Rejects Strathcona’s Sweetened Offer in Favor of Cenovus

Directors cite leverage risk from a pledged payout alongside potential share overhang tied to concentrated ownership.

Overview

Strathcona’s revised all-stock bid offers 0.80 Strathcona share per MEG share, valued at about C$30.86 when announced last week.
MEG reiterates support for the Cenovus transaction that lets holders elect C$27.25 in cash or 1.325 Cenovus shares per MEG share, subject to proration limits.
The board warns Strathcona’s planned C$2.14 billion special distribution would boost leverage and leave MEG investors fully exposed to a riskier equity-only consideration.
MEG flags potential share overhang from Waterous Energy Fund’s large stake and says Strathcona has not provided sufficient lockup details to mitigate that risk.
A shareholder meeting on Oct. 9 requires two-thirds approval for the Cenovus deal, while Strathcona holds roughly 14.2% of MEG and plans to vote against it, with its own offer open until Oct. 20.