Strathcona Makes Takeover Offer for MEG Energy.
Strathcona has made an offer to acquire sector player MEG Energy for the equivalent of some $4.25 billion in cash and stock, per Reuters calculations. The offer represents a 9.3% premium to MEG Energy’s closing price on Thursday.
“The combination of Strathcona and MEG would unify two 100+ Mbbls/d heavy oil “pure plays” with near identical netbacks and reserve life indexes, both focused on SAGD oil sands development,” Strathcona said in a news release.
The company added that the takeover, if successful, would turn the combined company into the fourth-largest oil producer among companies using team-assisted gravity drainage recovery technology in the oil sands. It would also result in the fifth-largest oil company in Canada overall, Strathcona said, positioning it for an investment-grade credit rating.
The deal would translate into savings of some $125 (C$175 million) million annually, Strathcona also said, most of which in operating synergies but also in interest payments and overhead costs.
The news of the takeover offer for MEG Energy comes on the heels of Strathcona’s decision to divest from its assets in the Montney formation. The total value of the three assets that Strathcona owned in the Montney shale stood at $2.84 billion. The largest portion of the asset sale was the disposal of the Kakwa asset, which Strathcona sold to ARC Resources for $1.695 billion.
Source: Oilprice