MEG Energy Corp. investors will have to wait an additional week for the shareholder vote concerning the proposed acquisition by Cenovus Energy Inc. The meeting was adjourned until November 6 after MEG’s board chair, James McFarland, halted the proceedings twice to address a sudden “regulatory inquiry.”
The delay marks the latest development in a contentious takeover battle that saw Cenovus Energy, a major player in the oilsands sector, clash with the smaller competitor, Strathcona Resources Ltd. Earlier this month, Strathcona withdrew its all-stock bid and pledged to support Cenovus’ improved offer, which it sweetened to secure MEG’s 14 percent stake.
In a strategic move, Cenovus sold its Vawn thermal heavy oil operation in Saskatchewan and undeveloped land in Saskatchewan and Alberta to Strathcona for $150 million, with a portion paid upfront and the rest contingent on future commodity prices. McFarland explained that the adjournment was agreed upon by Cenovus to allow MEG to disclose more details about the asset transaction with Strathcona and the board’s decision-making process.
The saga began in April when Strathcona made a cash-and-stock bid for MEG, which was rejected by the board. Subsequently, Strathcona engaged directly with MEG shareholders, prompting a review by MEG’s board to seek better alternatives. Despite accusations from Strathcona’s executive chairman, Adam Waterous, of MEG’s reluctance to engage, MEG ultimately accepted Cenovus’ friendly takeover bid in August.
Following further negotiations, Cenovus increased its bid in early October, offering more stock and equity. The companies reached an agreement allowing Cenovus to acquire up to 9.9% of MEG’s stock before the shareholder vote. Shortly after, Strathcona withdrew its bid due to unsatisfactory conditions, leading to criticism from some MEG shareholders over perceived unfair tactics to secure the deal with Cenovus.
Both Cenovus and MEG operate oilsands properties near Christina Lake, south of Fort McMurray, Alberta, with the potential for cost savings and operational synergies. If the acquisition proceeds, Cenovus stands to gain an additional 110,000 barrels per day of oilsands production, boosting its total to 720,000 boe/d, with potential growth to 850,000 boe/d by 2028.