Latest news with #Strathcona
Calgary Herald
2 days ago
- Business
- Calgary Herald
Strathcona's hostile bid for MEG Energy called the 'largest investment in the Canadian oilpatch in a decade'
Article content The terms of the deal are the same as a proposal that was originally made to MEG in April, which was subsequently rejected by the company's board on May 13. MEG indicated at the time that it was not interested in pursuing a combination, according to Strathcona. Article content In response to Strathcona's filing Friday, MEG urged shareholders to wait until the board could provide a formal recommendation. Article content MEG's board has formed a special committee of independent directors to evaluate the offer, the company said Friday, noting that it would provide a recommendation within 15 days. Article content Some MEG shareholders have taken the view that Strathcona's bid doesn't sufficiently recognize the quality of the oilsand firm's Christina Lake assets and the potential of its undeveloped holdings at the Surmont Project in the southern Athabasca region of Alberta. Article content Waterous said the deal provides MEG shareholders with an immediate nine per cent premium on MEG's shares, stronger per-share earnings and cash flow, and the potential for a re-rating of Strathcona that would lower borrowing costs and boost its stock valuation. Article content Article content If the bid succeeds, MEG would be Strathcona's 11th major acquisition. Article content Some MEG shareholders have said they're more than willing to throw their support behind a private-equity player with a track record for dealmaking. Article content Cole Smead, chief executive officer of Smead Capital Management Inc., said agreeing to Strathcona's offer would give MEG shareholders a piece of Waterous' private-equity fund without paying any management or performance fees. Article content 'We just get to ride along as a public shareholder and we get to gain the benefits of his capital-allocation stewardship, and we don't pay any performance fees to him,' Smead said. 'There's a divide in the energy business between people who are good capital allocators and people who are not. Adam Waterous is one of the best.' Article content Article content Sayer Energy Advisors had been predicting a more subdued year for merger-and-acquisition activity in the Canadian upstream oil and gas sector compared to 2024, with total transaction values projected to be in the $15-billion range. Article content Then Whitecap Resources Inc. and Veren Inc. (formerly Crescent Point Energy Corp.) announced their multi-billion-dollar merger in March, followed by nearly $4 billion more in M&A activity in the second quarter so far. Article content 'We're already higher than what we thought we were going to be for all of 2025,' Tom Pavic, Sayer Energy Advisors' president, said. 'And I'm not even counting (Strathcona's bid for MEG) because we don't know how this is going to shake out.' Article content
Globe and Mail
3 days ago
- Business
- Globe and Mail
Waterous fund would own more than half of company formed from Strathcona's takeover of MEG Energy
An investment fund led by Strathcona Resources Ltd.'s SCR-T executive chairman will control more than half of the shares of the oil company that would result from Strathcona's $5.9-billion takeover of MEG Energy Corp. MEG-T If Strathcona's hostile bid for the rival oil sands producer is successful, Adam Waterous's Waterous Energy Fund will acquire $662-million of stock in the combined company to put its stake at 51 per cent, according to details of the offer released in the formal bid document on Friday. WEF currently owns 79.6 per cent of Strathcona shares. Strathcona announced its unsolicited cash-and-stock offer for MEG on May 15, saying the two oil sands-producing entities are highly complementary in geography, operations, reserve-life indexes and profit margins. Why Canadian energy is a secret bargain, spurring a hostile takeover bid in the oil sands Mr. Waterous said MEG shareholders would benefit in three ways: through a 9 per cent premium over the value of their shares, as measured when the deal was announced, higher earnings and cash flow per share and an improvement in credit rating to investment-grade status, which will reduce the cost of capital. 'This is the financial Abominable Snowman – often talked about but never seen,' he said in an interview. He pointed out that WEF's participation in the deal, at a cost of $30.92 a share, would represent the largest equity investment in the Canadian oil patch in more than a decade. 'And we think we're going to get private-equity rates of return on that,' he said. Strathcona is offering MEG shareholders 0.62 of a Strathcona share and $4.10 in cash for each MEG share. The bid will remain open until Sept. 15. MEG shares were down 2 per cent at $24.11 on the Toronto Stock Exchange on Friday. Strathcona was up 2 per cent at $29.49, putting the value of its offer at $22.38, suggesting investors are still wagering on a higher offer. Analysts have speculated some of the country's large established oil sands companies may consider riding in as white knights. In a statement on Friday, MEG urged its shareholders not to tender to the Strathcona bid. The takeover target said it had formed a special committee of its board, which will evaluate the offer with the company's financial advisers. It plans to respond by June 16 days with a recommendation. It said it remains committed to its long-term strategy and is confident that it will create value. Officials declined to comment further. According to the bid circular, Strathcona amassed a 9.2 per cent interest in MEG through share purchases in the first and second quarters of this year. Mr. Waterous approached MEG director Jeff McCaig on April 10 to discuss the merits of a potential deal, and on April 28, sent a formal proposal outlining terms and conditions, including the price. On May 13, MEG Chairman Jim McFarland wrote back to say the company was not interested. Strathcona went public with its bid two days later. When they rejected the friendly approach, MEG's directors did not know that Strathcona was close to announcing a series of asset sales to focus its operations on heavy oil and reduce its debt, Mr. Waterous said. Just before announcing its bid, it sold Montney natural gas assets in two deals for total proceeds of $2.84-billion. 'MEG has not yet had the opportunity to evaluate our offer. So this is the first time. Now that they see we are such a lookalike business to them, a bigger look alike business, I think it will be much more straightforward for the board to be able to see the merits of the financial triple-jump,' he said.
CTV News
3 days ago
- Business
- CTV News
Strathcona formally launches takeover bid for oilsands peer MEG Energy
The MEG Energy Corp. logo is seen in this undated handout photo. THE CANADIAN PRESS/HO, MEG Energy *MANDATORY CREDIT* CALGARY — Strathcona Resources Ltd. has formally launched its takeover bid for fellow oilsands producer MEG Energy. Its offer, open until Sept. 15, comprises 0.62 of a common share of Strathcona and $4.10 in cash for each MEG share it doesn't already own. MEG said Friday that its board as well as legal and financial advisers will consider the offer. A special committee of independent directors will assist in that review. The target company is urging shareholders to take no action until it has made a recommendation, which it expects to do within 15 days. Also Friday, Strathcona announced an equity commitment letter with Waterous Energy Fund, whose CEO Adam Waterous is executive chairman of Strathcona. The fund owns almost 80 per cent of Strathcona shares, and the new investment is worth about $662 million. 'WEF's major further investment in Strathcona reflects our view that more than eight years into building Strathcona, our best years are in front of us. As part of the offer, we are asking MEG shareholders to join us as fellow shareholders in Strathcona and trust the Strathcona team as stewards of their capital,' Waterous said in a release Friday. 'We therefore believe it is important that we eat our own cooking, ensuring no one will be more focused on increasing Strathcona's value beyond current levels than WEF. We firmly believe Strathcona represents compelling value at this price with a large margin of safety, and that we and the partners in our fund will do very well over the long run.' Strathcona announced its ambitions to snap up MEG earlier this month. On a call with analysts at the time, Waterous said his company and MEG have assets so complementary they are like 'doppelgangers' or 'brothers from another mother.' Strathcona and MEG both extract bitumen using steam-driven techniques in eastern Alberta and don't have fuel refining or retail businesses like some bigger oilsands players. Shortly before the MEG bid was announced, Strathcona signalled its plans to become a pure-play heavy oil company when it announced the sale of its Alberta shale natural gas operations in three separate deals for a total of $2.84 billion. It also said it bought the Hardisty crude-by-rail terminal in Alberta for about $45 million. Strathcona shares rose more than two per cent to $29.42 in Friday trading on the Toronto Stock Exchange. MEG shares fell almost two per cent to $24.53. MEG's stock has been trading higher than the value of the bid, suggesting investors believe a better offer might come along. Analysts have said competing bids may come from oilsands majors like Cenovus Energy Inc., Canadian Natural Resources Ltd. or Imperial Oil Ltd. This report by The Canadian Press was first published May 30, 2025. Companies in this story: (TSX: MEG, TSX: SCR, TSX: CVE, TSX: CNQ, TSX: IMO) Lauren Krugel, The Canadian Press
Winnipeg Free Press
3 days ago
- Business
- Winnipeg Free Press
Strathcona formally launches takeover bid for oilsands peer MEG Energy
CALGARY – Strathcona Resources Ltd. has begun its formal takeover bid for fellow oilsands producer MEG Energy. Its offer comprises 0.62 of a common share of Strathcona and $4.10 in cash for each MEG share it doesn't already own. The offer is open until Sept. 15. MEG says its board and legal and financial advisers will consider the offer, and that a special committee of independent directors will assist. The target company is urging shareholders to take no action until it has made a recommendation, which it expects to do within 15 days. Strathcona also announced an equity commitment letter with Waterous Energy Fund, whose CEO Adam Waterous is executive chairman of Strathcona. Monday Mornings The latest local business news and a lookahead to the coming week. The fund owns almost 80 per cent of Strathcona shares, and the new investment is worth about $662 million. 'WEF's major further investment in Strathcona reflects our view that more than eight years into building Strathcona, our best years are in front of us. As part of the offer, we are asking MEG shareholders to join us as fellow shareholders in Strathcona and trust the Strathcona team as stewards of their capital,' Waterous said in a release Friday. 'We therefore believe it is important that we eat our own cooking, ensuring no one will be more focused on increasing Strathcona's value beyond current levels than WEF. We firmly believe Strathcona represents compelling value at this price with a large margin of safety, and that we and the partners in our fund will do very well over the long run.' This report by The Canadian Press was first published May 30, 2025. Companies in this story: (TSX: MEG, TSX: SCR)
Yahoo
3 days ago
- Business
- Yahoo
Strathcona formally launches takeover bid for oilsands peer MEG Energy
CALGARY — Strathcona Resources Ltd. has begun its formal takeover bid for fellow oilsands producer MEG Energy. Its offer comprises 0.62 of a common share of Strathcona and $4.10 in cash for each MEG share it doesn't already own. The offer is open until Sept. 15. MEG says its board and legal and financial advisers will consider the offer, and that a special committee of independent directors will assist. The target company is urging shareholders to take no action until it has made a recommendation, which it expects to do within 15 days. Strathcona also announced an equity commitment letter with Waterous Energy Fund, whose CEO Adam Waterous is executive chairman of Strathcona. The fund owns almost 80 per cent of Strathcona shares, and the new investment is worth about $662 million. "WEF's major further investment in Strathcona reflects our view that more than eight years into building Strathcona, our best years are in front of us. As part of the offer, we are asking MEG shareholders to join us as fellow shareholders in Strathcona and trust the Strathcona team as stewards of their capital," Waterous said in a release Friday. "We therefore believe it is important that we eat our own cooking, ensuring no one will be more focused on increasing Strathcona's value beyond current levels than WEF. We firmly believe Strathcona represents compelling value at this price with a large margin of safety, and that we and the partners in our fund will do very well over the long run." This report by The Canadian Press was first published May 30, 2025. Companies in this story: (TSX: MEG, TSX: SCR) The Canadian Press
