Canadian Oil Sands draws more suitors
Four parties currently examining heavy-oil company’s financial data
CALGARY There are reportedly four “highly credible parties” interested in acquiring Canadian Oil Sands Ltd., which will take its battle against a hostile takeover bid by Suncor Energy Inc. to a Calgary securities commission hearing Thursday.
There are 25 parties reviewing the Canadian Oil Sands “opportunity,” four of which have signed confidentiality agreements with the company, according to an affidavit sworn by Canadian Oil Sands’ financial advisor and RBC Capital Markets deputy chair Jamie Anderson.
The affidavit did not provide detail on which parties had signed confidentiality agreements with Canadian Oil Sands and the company declined a request for comment.
“I firmly believe that with more time to run our process, there is a good prospect for one or more counterparties to make a proposal,” Anderson’s affidavit said.
Imperial Oil Ltd. has long been rumoured as a potential suitor for Canadian Oil Sands. Imperial has consistently declined to comment on the matter.
Like Suncor, Imperial owns a stake in the Syncrude Canada Ltd. joint venture. Acquiring Canadian Oil Sands would make either Suncor or Imperial the largest single shareholder in Syncrude.
Anderson also called on the Alberta Securities Commission to allow Canadian Oil Sands to change its shareholder rights plan so that any potential bidder would need to provide a minimum 120-day expiry period for an offer.
Suncor provided a 60-day expiry period when it offered $4.3-billion worth of its own shares in an unsolicited bid for Canadian Oil Sands on Oct. 5.
Canadian Oil Sands subsequently adopted a new rights plan, with a poison pill provision, in an attempt to fend off Suncor’s hostile bid, which is worth $6.6 billion including debt.
The securities commission will hear arguments from Suncor and Canadian Oil Sands on the bid and the competing shareholder rights plans on Thursday and Friday – which is roughly one week before Suncor’s initial offer expires.
Suncor spokesperson Sneh Seetal said in a release that the company “will argue the merits of our position” but declined to comment on the affidavits filed ahead of the hearing “out of respect for the ASC and their process.”
A source familiar with Canadian Oil Sands said 76 shareholders have written to the ASC to ask the commission to adopt the company’s 120-day timeline for permitted bids. The ASC declined to comment on whether or not that number of shareholder inquiries is normal for rights plan hearings.
“Suncor itself took almost a year to evaluate COS before deciding to make an offer,” Canadian Oil Sands’ written submission to the ASC said, adding that 120 days is needed to attract other offers.
The submission says that Suncor first began evaluating the potential of a bid for Canadian Oil Sands in Dec. 2014.
“I wouldn’t be surprised if they were looking at a number of targets,” AltaCorp Capital analyst Nicholas Lupick said of Suncor.
“There’s a big difference between looking at targets and actually going through and making a formal bid for one, obviously there’s a lot of steps in between. My bet is they’ve been looking at things on and off for quite some time,” Lupick said.