MEG meeting on Cenovus deal put on hold to address ‘regulatory probe’
MEG Energy Corp.’s chairman has paused a shareholder meeting on a proposed acquisition by Cenovus Energy Inc. to address an unspecified regulatory matter.
The meeting was scheduled for 9 am local time on Thursday, but will now resume at 2 pm
“My role as chairman is a little more difficult this morning,” James McFarland said at the meeting, held in person and on webcast.
“I have decided to adjourn the meeting…to allow us time to address the regulatory investigation that occurred late yesterday evening.”
McFarland did not elaborate on the nature of the questioning.
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.
Cenovus and MEG own adjacent oil sands properties in Christina Lake, south of Fort McMurray, Alta., while Strathcona also has steam-powered operations in the area.
The sweetened offer, made up of half cash and half stock, is worth $30 per share, based on Cenovus’ closing stock price on Friday. Earlier, it had offered $29.50 in cash or 1.240 Cenovus shares, which were worth $29.65 as of Friday.
The saga began in April when Strathcona approached the MEG board with a cash-and-stock takeover bid. Strathcona 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 the first friendly takeover offer from Cenovus. The following month, Strathcona amended its offer to be based entirely on stock, arguing that the structure would give investors a greater opportunity to profit from future growth.
Cenovus increased its bid and offered more equity shares 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. Some people wrote letters to the Alberta Securities Commission asking for an investigation.
