Strathcona Boosts MEG Bid With 11% Premium Over Cenovus Deal

Strathcona Resources lifted and extended its hostile offer for MEG Energy to 0.80 Strathcona shares per MEG share, valuing MEG at C$30.86 and topping MEG’s agreement with Cenovus by 11%, with the bid now expiring at 5:00 p.m. MT on October 20, 2025.

Key news/development:

Offer raised & extended: 0.80 SCR share per MEG share (“all-share”) worth C$30.86 based on Sept. 5 VWAPs—11% premium to the MEG–Cenovus deal currently valued at C$27.79. Bid deadline: October 20, 2025 (5:00 p.m. MT). Special distribution: Strathcona plans a C$2.142B payout in Q4; if the bid succeeds, ~C$5.22/share; if it fails, ~C$10.00/share to existing SCR holders. Pro forma targets: ~410m shares outstanding, C$3.0B Net Debt, ~1.1x Net Debt/EBITDA at US$60 WTI. Ownership mix post-deal: WEF/insiders 48%, other SCR 9%, MEG holders 43%. WEF stance: Says it has no current plans to sell and is willing to lock up in a supported transaction. MEG vote: Strathcona will vote its 14.2% MEG stake against the MEG–Cenovus deal at MEG’s Oct. 9 special meeting (requires 66?% approval).

Context & implications

MEG announced a cash-heavy sale to Cenovus on Aug. 22, 2025; Strathcona argues the structure “crystallizes” value and leaves MEG investors with only ~4% ongoing exposure via Cenovus shares. Strathcona says Cenovus’ stock rose ~10% post-deal announcement (about C$3.9B in value), evidence—per Strathcona—of a lopsided outcome for MEG holders and of a “broken” sale process that excluded Strathcona unless it dropped its prior bid. Strategically, Strathcona pitches a pure-play SAGD champion, claiming C$205M in annual synergies (C$50M overhead, C$55M interest, C$100M operating) and an expected investment-grade upgrade for the combined company. Liquidity & index angle: Strathcona projects a ~12x jump in trading value to ~C$65M/day and eligibility for major Canadian equity indices, potentially drawing passive flows. Accretion guidance (company-provided): MEG holders 13–40% per-share accretion on funds flow/production/NAV; SCR holders 7–14%. Metrics use non-GAAP measures and company assumptions, including reinvestment of the special distribution.

Why it matters for investors

The amended, all-share offer raises consideration and keeps upside in a cyclical oil sands asset with long reserve life, contrasting with MEG’s cash-heavy Cenovus deal. The bid’s success likely hinges on shareholder sentiment ahead of MEG’s Oct. 9 vote and on whether MEG’s board opens the door to Strathcona or continues to back Cenovus. Outcome could reshape Canada’s upstream landscape, creating what Strathcona calls the largest North American pure-play oil producer without mining/refining exposure.

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