Cenovus Energy to buy MEG Energy in C$7.9B deal, topping Strathcona bid

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Cenovus Energy (NYSE:CVE [https://seekingalpha.com/symbol/CVE]) agreed to acquire [https://seekingalpha.com/pr/20208967-cenovus-announces-agreement-to-acquire-meg-energy] MEG Energy (OTCPK:MEGEF [https://seekingalpha.com/symbol/MEGEF]) in a cash and stock deal valued at C$7.9B (~US$5.7B) including debt, creating one of Canada's largest oil sands companies, the companies announced Friday.

In May [https://seekingalpha.com/news/4449496-strathcona-resources-makes-c59b-takeover-offer-for-meg-energy], Strathcona Resources (OTCPK:STHRF [https://seekingalpha.com/symbol/STHRF]) said it planned to launch a C$5.9B hostile takeover bid for MEG (OTCPK:MEGEF [https://seekingalpha.com/symbol/MEGEF]).

Under the deal terms, Cenovus (NYSE:CVE [https://seekingalpha.com/symbol/CVE]) will acquire MEG (OTCPK:MEGEF [https://seekingalpha.com/symbol/MEGEF]) for C$27.25/share, which will be paid 75% in cash and 25% in Cenovus common shares; each MEG shareholder will have the option to elect to receive for each MEG common share C$27.25 in cash or 1.325 Cenovus common shares, subject to pro-ration.

Cenovus (CVE [https://seekingalpha.com/symbol/CVE]) said it expects to realize ~C$150M of near-term annual synergies, growing to more than C$400M/year in 2028 and beyond.

"This transaction represents a unique opportunity to acquire ~110K bbl/day of production within some of the highest quality, longest-life oil sands resource in the basin, which sits directly adjacent to our core Christina Lake asset," Cenovus (CVE [https://seekingalpha.com/symbol/CVE]) President and CEO Jon McKenzie said.

MORE ON CENOVUS ENERGY AND MEG ENERGY

* Strathcona Resources: MEG Energy Or A $10 Dividend? Cenovus Holds The Answer [https://seekingalpha.com/article/4814872-strathcona-resources-meg-energy-or-10-dividend-cenovus-holds-answer]
* MEG Energy: Repurchase Program, Low Debt, Growth, And Lower Costs Will Pave The Way [https://seekingalpha.com/article/4812995-meg-energy-repurchase-program-low-debt-growth-and-lower-costs-will-pave-the-way]
* Cenovus Energy: Growth, Repurchase Program, And Competitive Advantage Are Compelling Advantages [https://seekingalpha.com/article/4809358-cenovus-energy-growth-repurchase-program-and-competitive-advantage-are-compelling-advantages]