Strathcona Resources Ltd. has decided to withdraw its unfriendly takeover attempt of MEG Energy Corp., making way for a competing friendly bid from Cenovus Energy Inc. This decision follows Cenovus’ recent improved offer for MEG, a player in Alberta’s oilsands sector, where Strathcona also operates.
In its announcement on Friday, Strathcona stated that due to the revised agreement between MEG’s board and Cenovus, the conditions for its offer or any potential enhanced offer are no longer feasible. Strathcona currently holds a 14.2% stake in MEG and had proposed exchanging 0.80 of its shares for each MEG share not already owned.
Cenovus’ latest proposal, disclosed on Wednesday, values MEG at $8.6 billion, encompassing assumed debt, with half in equity and half in stock. This offer differs from its previous cash-heavy bid, with some MEG shareholders advocating for a greater equity component in the post-acquisition entity.
Although expressing disappointment over the outcome, Strathcona acknowledged the positive impact of its efforts and those of fellow MEG shareholders in facilitating a more equitable deal with Cenovus. Strathcona expressed gratitude to its shareholders for their backing throughout the process.
Earlier this week, MEG and Cenovus revised the terms of their standstill agreement, permitting Cenovus to acquire approximately 10% of MEG’s shares. Strathcona criticized this move as unprecedented in the Canadian public markets and part of a series of actions it considers anticompetitive by MEG’s board.
With plans to distribute a special payment of $10 per share to its shareholders, Strathcona aims to be the sole pure-play oil producer in North America exceeding 50,000 barrels per day without mines or refineries post the MEG sale. The company, along with MEG and Cenovus, employs steam-assisted gravity drainage in extracting oilsands bitumen. MEG shareholders are set to vote on the revised Cenovus offer on Oct. 22.