MEG meeting on Cenovus deal postponed for another week
MEG Energy Corporation’s shareholder vote on its proposed acquisition by Cenovus Energy Inc. has been delayed another week.
MEG Board Chairman James McFarland twice paused a meeting Thursday to address a last-minute “regulatory investigation” before adjourning until Nov. 6.
It is the latest twist in a months-long bitter takeover battle that has pitted oilsands giant Cenovus against smaller rival bidder Strathcona Resources Ltd.
Strathcona abandoned its all-stock bid earlier this month and promised on Monday that it would vote its 14 percent stake in MEG in favor of Cenovus’ superior offer.
Also on Monday, Cenovus 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 more depending on future commodity prices.
“This meeting is being adjourned with the consent of Cenovus so that MEG can disclose additional information on the previously announced asset transaction between Strathcona Resources Ltd. and Cenovus and the related process of the MEG Board,” McFarland said.
The saga began in April when Strathcona contacted the MEG board cash and stock takeover bidStrathcona rejected and took the offer directly to MEG shareholders a few weeks later.
In June, MEG’s board called the bid “opportunistic” and urged shareholders to reject it as it launched a review to find a better offer. Strathcona acting chairman Adam Watrous accused MEG of refusing to engage and taking a stance “other than Strathcona”.
In August, MEG announced that its board had accepted a friendly takeover offer from Cenovus. The following month, Strathcona based its offer entirely on stock, arguing that the structure would give investors greater opportunity to profit from future growth.
Cenovus increased my bid and a larger equity share offering in early October, and the companies agreed to allow Cenovus to buy up to 9.9 percent of the target company’s stock before a shareholder vote.
Strathcona abandoned its bid a few days later, saying the terms of its offer could no longer be met, while some MEG shareholders condemned it as an unfair strategy to close the deal with Cenovus.
Cenovus and MEG own adjacent oilsands properties in Christina Lake, south of Fort McMurray, Alta., and the companies have touted the cost savings and efficiencies that will result from joining forces. Strathcona also has steam operations in the area.
If the deal goes ahead, it would add 110,000 barrels of daily oil sands production to Cenovus’ portfolio, bringing it to 720,000 bo/d. Cenovus said production could rise to 850,000 boe/d in 2028.
