Strathcona Assets Ltd. stated it was “disenchanted” that the board of MEG Power Corp. has rejected its amended acquisition supply and chosen to stick with Cenovus Power Inc’s supply.
Strathcona’s amended supply is to amass the entire excellent shares of MEG Power Corp. for 0.80 Strathcona shares per MEG share, which it referred to as a “clearly superior” supply to Cenovus’ association settlement to amass MEG in a cash-and-stock transaction valued at $7.9 billion, inclusive of assumed debt, made in August.
The MEG board “has resorted to the identical sample of false and deceptive claims,” Strathcona stated in an announcement.
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Strathcona stated it “stays inspired by the sturdy shareholder help” for its amended supply, which expires on Oct. 20. The corporate acknowledged it’s going to stick to its plan to vote its roughly 14.2 p.c curiosity in MEG towards the decision to approve the acquisition of MEG by Cenovus, which requires approval by no less than 66 and two-thirds p.c of the votes forged by shareholders on the particular assembly scheduled on Oct. 9.
MEG Power Rejects Revised Provide
In a separate assertion, MEG stated that Strathcona filed a revision to the unique supply beneath which MEG shareholders could be eligible to obtain a proportionate share of a possible “particular distribution” by Strathcona totaling $2.142 billion, topic to numerous situations and approvals.
The particular distribution, if accomplished, “doesn’t ship incremental consideration to MEG shareholders as it might considerably enhance the leverage of the mixed firm and cut back its fairness worth by $2.142 billion, thereby negatively impacting the worth of Strathcona shares that MEG shareholders would obtain beneath the Revised Strathcona Provide,” MEG stated.
“The Revised Strathcona Provide stays basically unattractive for MEG shareholders as a result of it fails to deal with or adequately compensate for the numerous dangers embedded in Strathcona Shares,” MEG Chair James McFarland stated. “MEG shareholders could be uncovered to inferior belongings, an unproven observe document, an overvalued Strathcona share value, important overhang danger, and governance danger”.
McFarland added, “In distinction, the Cenovus transaction delivers a gorgeous value, upside potential, substantial money, and worth certainty that MEG Shareholders deserve. The board unanimously recommends that MEG shareholders vote FOR the Cenovus transaction”.
“By way of our engagement with MEG Shareholders, we’ve got heard overwhelming acknowledgement of the commercial logic of the Cenovus Transaction,” MEG President and CEO Darlene Gates, stated. “We have now additionally heard the vast majority of MEG institutional shareholders categorical issues round acceptance of Strathcona share consideration and the resultant impacts on the buying and selling of the mixed firm’s shares, with recognition of Strathcona’s inferior asset high quality, unproven observe document, inflated share value, and the dangers related to WEF possession”.
Cenovus, in a separate assertion, launched a presentation that it stated highlighted the transaction’s “superior worth” for MEG shareholders.
Cenovus stated its supply brings “scale, industry-leading expertise, tier-1 belongings, main near-term development, diversified revenues, a stronger steadiness sheet with clearly outlined and distinctive synergies, providing the chance to take part within the worth upside of the built-in Christina Lake area”.
In distinction, Strathcona’s shares are the one consideration supplied in its revised bid for MEG, and “these shares are illiquid and overvalued relative to friends,” Cenovus stated.
Strathcona’s proposal would additionally “end in Waterous Power Fund and different Strathcona insiders controlling the mixed firm, with pursuits that will not align with MEG shareholders,” Cenovus acknowledged.
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