Cenovus Energy on Wednesday sweetened its offer to acquire MEG Energy, raising the value of its proposed deal to $8.6 billion (US$6.16 billion), including debt, in an attempt to match a rival bid from Strathcona Resources.
Cenovus raised its bid by $2.35 to about $29.80 per share, and said this was its “best and final” offer. In comparison, Strathcona’s revised offer last month valued MEG at $30.86 per share.
The battle for MEG, Canada’s last large pure-play oil sands company, highlights a years-long trend of domestic consolidation in the country’s oil sands. The play is now mostly controlled by a handful of large Canadian companies after foreign players largely exited over the last decade.
MEG’s Christina Lake oil sands project has become a prized asset, with its long reserve life, low operating costs and significant potential for production growth, making it one of the few large-scale expansion opportunities.
Cenovus and MEG have also amended a standstill agreement to allow Cenovus to buy up to 9.9 per cent of MEG’s shares ahead of the merger vote.
The shareholder meeting has been postponed to Oct. 22 from Oct. 9 to allow investors more time to review the amended proposal.
Last month, MEG Energy urged shareholders to reject the takeover bid from its majority stakeholder, Strathcona, saying the offer “remains fundamentally unattractive,” and reaffirmed its support for the sale to Cenovus.
(Reporting by Tanay Dhumal in Bengaluru; Editing by Shreya Biswas and Shinjini Ganguli)