Cenovus extends MEG Energy offer, wins Strathcona’s support

Cenovus Energy Inc. has again raised its takeover offer for MEG Energy Corp., gaining the support of Strathcona Resources Ltd., which had opposed the deal.

Under the sweetened bid, Cenovus is offering $30 in cash or 1.255 Cenovus shares for each MEG share, leaving $3.8 billion in cash and 159.6 million shares available under the offer.

The offer is up from a previous offer of $29.50 in cash or 1.240 Cenovus common shares for each MEG share, which had $3.8 billion in cash and 157.7 million shares available.

MEG shareholders will vote on Thursday on the proposal, which has the support of the MEG board.

“With the support of Strathcona, MEG currently expects approximately 79 percent of the MEG shares represented by proxy or expected to be voted in person at the meeting are for approval of the Superior Cenovus Transaction,” MEG said in a statement.

A vote scheduled last week by MEG shareholders on the takeover proposal was delayed because it looked like it might fall short of the two-thirds majority needed for approval.

Strathcona Resources abandons attempt to acquire MEG Energy

However, Cenovus announced on Monday that it has now secured the backing of Strathcona, which owns a 14.2 percent stake in MEG and recently abandoned its own hostile all-stock offer for the company.

Cenovus and MEG own adjacent oilsands properties on Christina Lake south of Fort McMurray, Alta., while Strathcona also has operations in the area.

Cenovus also announced the sale of its Vaughan Thermal heavy oil operation in Saskatchewan and certain undeveloped land in western Saskatchewan and Alberta to Strathcona for $150 million, including $75 million in cash paid at closing and up to $75 million of contingent consideration dependent on future commodity prices.