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5mo ago

Strathcona Launches $5.93B Hostile Bid for MEG Energy in Push to Reshape Oil Sands Sector

The unsolicited offer, including cash, stock, and the Hardisty Rail Terminal, aims to create Canada’s fifth-largest oil producer, while MEG’s board urges shareholders to hold off.

An oil pump jack pumps oil in a field near Calgary, Alberta, Canada on July 21, 2014.
Calgary-based Strathcona Resources has made a $9.5 billion takeover bid for oilsands producer MEG Energy.

Overview

  • Strathcona Resources has officially tabled a $5.93-billion hostile takeover bid for MEG Energy, offering 0.62 of its shares plus $4.10 in cash per MEG share, a 9.3% premium.
  • The proposed merger would create Canada’s fifth-largest oil producer, with 219,000 barrels per day of production and $175 million in projected annual cost savings.
  • The deal includes the Hardisty Rail Terminal, Western Canada’s largest crude-by-rail facility, which Strathcona views as a strategic hedge against pipeline capacity constraints.
  • MEG Energy’s board has rejected earlier offers and is advising shareholders to take no immediate action as it evaluates the formal bid.
  • MEG shares surged over 22% following the announcement, reflecting market speculation of a potential bidding war or revised offers.