Cenovus Power Inc stated Tuesday it has acquired 8.5 % of MEG Power Corp’s widespread inventory via open buying and selling, whilst its takeover provide for the pure-play oil sands producer progresses with Strathcona Assets Ltd dropping a competing bid.
The open-market acquisition concerned about 21.72 million shares out of round 254.38 million MEG widespread shares issued and excellent, Toronto- and New York-listed Cenovus stated in a press release on its web site.
Cenovus began shopping for into Toronto-listed MEG October 8, in keeping with Tuesday’s assertion. That day, Cenovus introduced it had signed a brand new settlement with MEG that amended the value and the cash-and-stock allocation for the takeover.
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The transactions occurred “via the amenities of the Toronto Inventory Alternate or different Canadian various exchanges or markets”, Cenovus stated.
“The MEG widespread shares have been acquired by Cenovus in furtherance of its beforehand introduced transaction with MEG”, Cenovus stated. “To the extent Cenovus is ready, the corporate intends to vote any acquired shares in favor of the transaction”.
Beneath the amended settlement, every MEG shareholder can decide to obtain for every MEG widespread share CAD 29.5 ($21) in money or 1.24 Cenovus widespread shares, topic to a most of $3.8 billion in money and 157.7 million Cenovus widespread shares.
“The professional-rated consideration represents a mixture of 50 % money and 50 % Cenovus widespread shares”, Cenovus stated in a press launch October 8.
“On a totally pro-rated foundation, the consideration per MEG widespread share represents roughly CAD 14.75 in money and 0.62 of a Cenovus widespread share.
“The absolutely pro-rated consideration for MEG represents a price of roughly CAD 29.8 per MEG share at Cenovus’ closing share value on October 7, 2025, a rise of roughly CAD 1.32 per share based mostly on present market pricing relative to the phrases of the unique association settlement.
“The consideration beneath the amended settlement represents Cenovus’ greatest and ultimate provide for MEG”.
Cenovus president and chief government Jon McKenzie stated, “We obtained assist from nearly all of MEG’s shareholders for our transaction. Nonetheless, many MEG shareholders indicated that they would favor to obtain larger Cenovus share consideration, in order that they will extra absolutely take part within the upside of the mixed firm”.
Concurrently Cenovus and MEG edited their standstill settlement “to permit Cenovus to finish purchases of as much as 9.9 % of MEG’s excellent widespread shares”, in keeping with the October 8 assertion.
“On account of the decrease most money consideration to be issued beneath the amended settlement, if the transaction is accredited by MEG shareholders, Cenovus intends to extend deliberate share repurchases over the approaching quarters”, the assertion stated.
MEG chair James McFarland stated in a separate on-line assertion by MEG October 8, “This marks the third enhancement to the phrases initially put ahead by Cenovus, delivering a major enhance to an already engaging transaction… The improved transaction consideration implies a flowing-barrel metric of CAD 79,500 per bpd, the very best worth ever paid for a pure-play oil sands asset”.
MEG shareholders have till October 22 to vote on the merger, which wants an approval of no less than roughly 66.67 % of MEG shareholders represented in particular person or by proxy on the October 22 assembly, MEG stated October 8.
Two days later Toronto-listed Strathcona, already a MEG shareholder, stated it had terminated its bid.
“On account of the revised association settlement between the MEG board of administrators and Cenovus Power Inc, Strathcona believes the circumstances to its provide, or any fairly improved provide, are now not able to being happy”, Strathcona stated in an internet assertion October 10.
“On the again of a failed shareholder vote, the MEG board’s choice to waive Cenovus’ standstill and permit it to vote shares acquired after the file date in favor of its personal transaction is with out precedent within the Canadian public markets and the most recent in a sequence of anti-competitive actions taken by the MEG board.
“Strathcona has concluded that the MEG board’s capacity to constantly prolong the Cenovus assembly date, and constantly permit Cenovus to buy and vote extra shares, makes an improved provide for MEG impractical and never in the very best pursuits of Strathcona shareholders.
“Whereas Strathcona is disillusioned with this final result, it’s happy that its actions, together with these of its fellow MEG shareholders, delivered one thing which the MEG board couldn’t, specifically a extra equitable transaction with Cenovus which permits MEG shareholders to take part extra meaningfully in future upside”.
Strathcona added, “Following the sale of MEG, Strathcona would be the solely pure-play oil firm in North America producing greater than 50 Mbbls/d with out mines or refineries”.
MEG has but to answer to Rigzone’s request for touch upon Strathcona’s assertion.
Strathcona had elevated its shareholding in MEG, which might permit it to vote extra shares in opposition to Cenovus’ provide.
In an internet assertion September 4, Strathcona stated its possession of issued and excellent MEG shares elevated from about 11.8 % to about 14.2 % as of the date.
MEG produces oil via steam-assisted gravity drainage (SAGD) at Alberta province’s Christina Lake, the place Cenovus already has SAGD manufacturing. Cenovus additionally has thermal and standard crude oil and pure gasoline initiatives throughout Western Canada, crude manufacturing offshore Newfoundland and Labrador and gasoline and liquids manufacturing offshore China and Indonesia, in addition to downstream operations in Canada and the USA, in keeping with Cenovus.
Cenovus and MEG have a mixed SAGD oil sands manufacturing of over 720,000 barrels per day, in keeping with Cenovus’ preliminary announcement of the settlement August 22.
To contact the writer, electronic mail jov.onsat@rigzone.com
