SCHULICH SEES WAY TO SUNCOR DEAL
Says COS takeover possible with an option to buy more shares after oil rebound
CALGARY • The most outspoken opponent of Suncor Energy Inc.’ s hostile takeover offer for Canadian Oil Sands Ltd. says he’d be willing to make a deal.
Canadian billionaire investor Seymour Schulich, who initially called Suncor’s $ 4.5 billion offer for COS “ridiculous,” said he and potentially others in his group of six major investors would be willing to support the deal if Suncor gave them an option to buy more Suncor shares should oil prices rise in the future.
Schulich said he’s “known as the centre of resistance to this offer,” but “it isn’t that I’m a guy that you can’t do a deal with.”
Suncor president and CEO Steve Williams sent a letter to COS shareholders Tuesday that said his company would “look to pursue other opportunities” if its all- share hostile takeover bid isn’t supported by the time it expires on Jan. 8.
Suncor did not amend its all- share offer for COS in the letter and instead turned up the pressure on the target company’s board and management, saying the collective group owned less than 0.1 per cent of COS and therefore “had no skin in the game, yet they want you to take a huge risk by rejecting our offer.”
Schulich, who alone owns five per cent of COS, said he’s part of a group of major investors who together control 28 per cent of the company and who won’t tender their shares with Suncor, which is offering to exchange each COS share for 0.25 Suncor shares.
He said he has approached Suncor about amending the offer, but the company has been unwilling to meet with him. Suncor did not respond to a request for comment on meetings or proposed meetings with COS shareholders.
He said none of his group wants to sell at a low point in the commodity price cycle. The price f or West Texas Intermediate oil has fallen below the US$ 38- per- barrel mark, close to its lowest price in 10 years.
“My attitude is if you give us a warrant on your stock that if oil goes up i n two years, in the next two years, the warrant has value and the shareholder gets value,” Schulich said.
“The warrant is triggered if oil sells over, say, US$ 65 or something for 20 days. If they put that in, I could support the deal,” he said.
Williams’ letter tells shareholders that “oil- price futures suggest we won’t see US$ 55 per barrel until at least 2020, so any promised upside ‘ torque’ to rising oil prices is wishful thinking at best.”
Suncor has repeatedly said that its offer is “full and fair” and has indicated it will not make a better offer.
“If they don’t believe oil is going anywhere, my deal won’t cost them anything. It’s absolutely cost free,” Schulich said.
As it stands, he said, “the offer is too low.”
Williams also said in his letter that “there is no evidence a better offer will emerge for COS,” and that COS told an Alberta Securities Commission hearing last month it had “only two meetings with potential buyers.”
One rumoured suitor for the target company is Imperial Oil Ltd. and its parent company Exxon Mobil Corp. Imperial has consistently refused to comment on the matter.
If either Suncor or Imperial were to purchase COS, the acquisitor would become t he l argest s i ngle s hareholder in the Syncrude Canada Ltd. joint venture. COS owns a 37- per- cent stake in Syncrude, which is the company’s only asset.