Major takeover offer emerges as low-oil environment drags on
CALGARY—The Canadian energy industry’s largest player is making a major move as the price of crude continues to languish around $45 per barrel.
Suncor Energy Inc. has formally launched an unsolicited takeover bid for Canadian Oil Sands Ltd. The Calgary-based oil and gas giant said it will look to acquire all outstanding shares of COS for approximately $4.3 billion in stock.
Under the prospective deal, COS shareholders would receive 0.25 per cent of a Suncor share for each share of COS held. Canadian Oil Sands is the largest partner in northern Alberta’s Syncrude oil sands development. Including of COS’ estimated outstanding debt the deal is valued at approximately $6.6 billion
“We believe this is a financially compelling opportunity for COS shareholders,” Steve Williams, Suncor’s president and CEO, said. “By accepting this offer, COS shareholders will become investors in Canada’s leading integrated energy company with 50 years of experience in oil sands operations and a track record of returning significant value to shareholders.
“We’re offering a significant premium to COS’ current market price and also providing exposure to a meaningful dividend increase. We’re confident in the value this offer provides to COS shareholders,” he added.
The offer price represents a 43 per cent premium on last week’s closing prices and a 35 per cent premium on COS’ share value over the last month.
Among the benefits of the deal, Suncor said COS shareholders will receive superior returns, investment in a company with significant liquidity and operational results as well as an established and experience management team.
Suncor said the offer will remain active until Dec. 5 unless extended or withdrawn.