Strathcona ups its offer for MEG Energy, sets new deadline for shareholders

The all-stock bid would provide MEG shareholders a 43 per cent stake in the combined company, compared to just under four per cent under Cenovus' cash-heavy agreement, Strathcona noted Monday in a statement blasting MEG's board for running a "broken" sale process. (Credit: MEG Energy)

Strathcona Resources Ltd. threw down the gauntlet Monday in the battle for MEG Energy Corp., announcing a higher, all-stock takeover offer in a bid to sway shareholders ahead of a crucial vote on rival Cenovus Energy Inc.‘s deal next month.

The heavy oil producer is now offering 0.80 of a Strathcona share per MEG share, valuing MEG at $30.86 per share, a 10 per cent bump from Strathcona’s original bid, based on Friday’s closing price.

The offer currently represents an 11 per cent premium over the implied value of Cenovus’s offer for MEG, also based on Friday’s closing price.

The all-stock bid would provide MEG shareholders a 43 per cent stake in the combined company, compared to just under four per cent under Cenovus’s cash-heavy agreement, Strathcona said in a statement on Monday, blasting MEG’s board for running a “broken” sale process.

“Simply put, the MEG board now holds the distinction of agreeing to the single most lopsided deal of any Canadian public company in nearly 20 years,” Strathcona said in a statement.

The improved offer comes just days before Strathcona’s original takeover bid was set to expire on Sep. 15, and one month before MEG shareholders are set to vote on Cenovus’ deal on Oct. 9.

The new deadline set for Strathcona’s amended bid is Oct. 20.

Strathcona, Cenovus woo MEG investors Strathcona plans to raise stake in MEG Energy

Though not strictly part of the proposed offer, Strathcona is also dangling the potential for MEG shareholders to benefit from Strathcona’s previously planned $2.1-billion special distribution — the result of the sale of its Montney gas assets — in a one-time payout to shareholders of about $5.22 per share, in the event 100 per cent of MEG’s shareholders take Strathcona up on its offer.

More to come…

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