Cenovus Energy Inc. has put forward a cash-and-stock proposal to acquire MEG Energy Corp., emphasizing the benefits of its offer compared to a competing all-stock bid by Strathcona Resources Ltd. According to Cenovus, their proposal provides MEG shareholders with a premium valuation, financial stability, and strategic synergies.
The revised offer from Strathcona now stands at 0.80 of a share for each MEG share not already owned, with a current value of $30.86 per share. In contrast, Cenovus’s bid comprises 72% cash and 28% stock, with an implied value of $28.44 per share, representing a significant 39% premium over MEG’s mid-May trading price.
Cenovus has highlighted potential risks associated with the Strathcona deal, citing concerns about the valuation of Strathcona’s shares post-transaction. The MEG board has unanimously endorsed Cenovus’s proposal over Strathcona’s, describing the latter as unappealing.
Strathcona has criticized the Cenovus offer as “lopsided” and denounced the MEG board’s decision-making process as flawed for favoring Cenovus without adequately considering Strathcona’s bid. Strathcona’s executive chairman, Adam Waterous, pointed out the substantial increase in Cenovus’s stock price following the announcement of the deal with MEG.
MEG shareholders are set to vote on Cenovus’s offer on October 9, requiring a two-thirds majority approval. Strathcona, holding a 14.2% stake in MEG, has indicated its intention to vote against the proposed deal. Both Cenovus and MEG operate in the oilsands region near Fort McMurray, Alberta, with Strathcona also having operations in the same area.