Hostile Husky takeover bid for MEG Energy now expected to succeed as proposed
The weakening macro oil economy of the past couple of months makes it unlikely that a rival bidder will emerge, says one analyst
CALGARY – A CIBC oil and gas analyst says the recent deterioration in crude oil prices makes it unlikely that a better offer will emerge to force Husky Energy Inc. to sweeten its hostile takeover bid for an oilsands rival.
Husky reported Tuesday that it had received all necessary regulatory approvals for the takeover of MEG Energy Corp. and is now waiting for shareholders’ response to its offer which expires in mid-January.
Analyst Jon Morrison says in a research report that Investment Canada approval of the proposed deal could at one time have prompted the emergence of a rival bidder – and a higher bid – for MEG, but the weakening macro oil economy of the past couple of months makes it unlikely now.
He says he doesn’t expect any of the four most likely competing bidders – Imperial Oil Ltd., Suncor Energy Inc., Cenovus Energy Inc. and Canadian Natural Resources Ltd. – to make a bid.
CIBC moved its price target for MEG down from $9.50 to $8.30 per share, with the new target matching the current Husky cash-and-shares offer.
The takeover was worth about $3.3 billion when proposed in September but has fallen to about $2.5 billion because of deterioration in Husky’s share price.
“While we held the view earlier in the year that there was the potential for Husky to modestly bump the bid to get the deal across the line, given the weakening macro market over the last couple months we no longer believe that to be the case,” said Morrison in his report.