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