After being rebuffed by MEG Vitality on its supply to accumulate all of the issued and excellent shares of the corporate, Strathcona mentioned it “welcomes the MEG board’s efforts to market-test the supply towards different acquisition proposals”.
“Strathcona is delighted that the MEG board has accepted Strathcona’s advice to provoke a strategic alternate options course of for the enterprise and totally helps them contacting different potential acquirers to find out if a superior transaction to Strathcona’s supply is accessible,” Stratchona Executve Chairman Adam Waterous mentioned in a press release.
On Might 30, Strathcona made a proper supply to accumulate all of the issued and excellent MEG shares it doesn’t already personal for a mixture of 0.62 of a Strathcona share and $4.10 in money per MEG share, which stays open till September 15.
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MEG’s second largest shareholder mentioned it “seems ahead to participating constructively and in good religion with the MEG board”.
Strathcona mentioned it posted a brand new presentation on its web site that “corrects a wide range of errors and deceptive statements within the Administrators’ Round which MEG and Strathcona shareholders are inspired to overview”.
“Strathcona seems ahead to taking part within the strategic alternate options course of which may even present a chance for MEG’s board to study extra about Strathcona, one thing which it has declined to do thus far. To offer the MEG board a head begin in understanding our enterprise, we now have corrected a wide range of inaccuracies contained of their round,” Waterous mentioned.
Final week, MEG’s board launched a press release saying that the acquisition bid was “insufficient, opportunistic, and never in one of the best pursuits of MEG or its shareholders”.
MEG Chairman James McFarland mentioned, “Strathcona’s Provide is insufficient by all affordable measures and isn’t the best path ahead for MEG shareholders. A mixture with Strathcona would expose shareholders to inferior belongings and important capital markets dangers, together with a $6 billion overhang ensuing from Waterous Vitality Fund’s [WEF] 51 p.c possession within the mixed firm, which might permit WEF buyers to comprehend liquidity over time”.
The MEG board revealed a Administrators’ Round, explaining the explanations for its advice to reject the proposal.
In response to the round, the Strathcona supply “lacks an actual premium”. Because the announcement of the supply, MEG shares have persistently traded above the implied worth of the supply, indicating that the market believes it considerably undervalues MEG’s shares, the board mentioned.
“MEG has pushed substantial transformation over the previous few years,” MEG CEO Darlene Gates mentioned. “With a stronger steadiness sheet and low-risk development from our accretive Facility Growth Undertaking, we’re delivering sustainable shareholder returns. Our rising free money move helps a sturdy return of capital program, whereas our multi-year funding plan gives entry to prime quality sources and reduces per-barrel prices and sustaining capital”.
In response to the MEG assertion, the corporate has obtained written opinions from monetary advisors BMO Capital Markets and RBC Capital Markets that the consideration beneath the supply is insufficient for shareholders.
The MEG board has created a particular committee to provoke a strategic overview of alternate options with the potential to floor a proposal superior to the corporate’s compelling standalone plan. MEG has begun an outreach to potential events to discover and solicit potential curiosity in another value-maximizing transaction for shareholders, in accordance with the assertion.
Strathcona mentioned its supply stays “compelling” for the shareholders of each corporations and gives a “true win-win” that will unite “two heavy oil ‘pure performs’ into a brand new Canadian oil champion, whereas delivering important accretion to MEG and Strathcona shareholders on all key metrics”.
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