Sweet­ened takeover

Sun­cor raises bid, buys Cana­dian Oil Sands for $6.6 bil­lion

The Guardian (Charlottetown) - - BUSINESS - THE CANA­DIAN PRESS CAB­I­NET

Cana­dian Oil Sands has ac­cepted a sweet­ened takeover of­fer from Sun­cor En­ergy as the mar­ket out­look for oil­sands pro­duc­ers de­te­ri­o­rates.

The deal draws to a close a bit­ter takeover bat­tle that pit­ted two part­ners in the mas­sive Syn­crude oil­sands mine against each other, with each side aim­ing to woo share­hold­ers with in­tense lob­by­ing, slick videos and full-page news­pa­per ads.

Sun­cor, Canada’s dom­i­nant oil­sands player, raised the all­stock bid by 12 per cent, bring­ing the to­tal price tag to $4.24 bil­lion, plus $2.4 bil­lion in COS debt.

Sun­cor (TSX:SU) is now of­fer­ing to ex­change 0.28 of one of its shares for each COS (TSX:COS) share — up from 0.25 of a Sun­cor share per COS share.

Based on Sun­cor’s clos­ing stock price Fri­day, the new of­fer was worth $8.74 per COS share, up from $7.81 un­der the orig­i­nal for­mula.

That’s still far below the $11.84 Sun­cor put on the ta­ble when it ap­proached COS about a friendly deal last spring — when the price of both oil and the ac­quirer’s shares were much higher.

Oil prices


hov­er­ing around the US$50 a bar­rel mark when Sun­cor made its ini­tial over­ture, but they have since slumped below US$30 a bar­rel, with few see­ing much hope for a quick re­bound.

Robert Cooper, with the in­sti­tu­tional sales and trad­ing team at Acu­men Cap­i­tal Part­ners in Cal­gary, said the deal is the best COS share­hold­ers can hope for in this mar­ket. But Cooper slammed COS for re­sist­ing the takeover for so long.

“Rel­a­tive to where it was in the spring, it’s still an epic fail,’’ said Cooper, de­clin­ing to dis­close his firm’s in­vest­ment in ei­ther firm.

“This is what they should have been do­ing in­stead of wast­ing money pro­duc­ing movies and lob­by­ing share­hold­ers. They should have been ne­go­ti­at­ing a bet­ter bid in the first place.’’

COS’s lead­er­ship had been ar­gu­ing share­hold­ers were bet­ter off with the com­pany stay­ing in­de­pen­dent.

But, in light of wors­en­ing mar­ket con­di­tions, it likely de­cided ne­go­ti­at­ing a higher bid was a bet­ter op­tion, said Samir Kayande, an an­a­lyst at RS En­ergy Group.


A Sun­cor En­ergy logo is seen in this file photo.

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