Canadian Oil Sands shares surge on hostile takeover bid
Investors bank on rival bid emerging
In the wake of an unsolicited takeover bid from Suncor Energy, Canadian Oil Sands could use a white knight. On Monday, its share price surged well beyond the value of Suncor’s offer as investors banked on a rival bid.
In the wake of an unsolicited takeover bid from Suncor Energy, Canadian Oil Sands could use a white knight.
What it could use is a company like its former self — Canadian Oil Sands Trust — which came to the rescue of Canada Southern Petroleum back in 2006 by trumping a hostile takeover attempt by Petro- Canada.
It created a bidding war for the junior oil and gas producer that saw its share price almost triple.
Suncor subsequently bought Petro- Canada in a friendly 2009 megadeal, and Canada’s largest oil company now has its sights set on the company that’s an investment vehicle, holding a 37 per cent ownership stake in fellow oilsands pioneer Syncrude Canada.
The all- stock offer is valued at $ 4.3 billion, but it’s less than the offer management at Canadian Oil Sands twice rejected from Suncor chief executive Steve Williams last spring.
On Monday, its share price surged well beyond the value of Suncor’s offer to $ 9.60 on the Toronto Stock Exchange as investors banked on a rival bid emerging.
Canadian Oil Sands has urged shareholders “not to take any action” before its board of directors can review the offer, which they’re expected to reject as too low.
Suncor currently owns 12 per cent of the Syncrude joint venture that dates to 1978.
Speculation immediately turned to Syncrude operator Imperial Oil, a 25 per cent owner of the joint venture, as the most likely suitor in what would be the biggest hostile takeover battle in the Canadian oilpatch since 1997 when Canadian Occidental swooped in to acquire Wascana Energy after an unsolicited offer from Talisman Energy.
That scenario almost two decades ago speaks to how infrequent hostile takeovers of rival companies occur.
A study of hostile takeovers in Canada in the decade up to 2014 by law firm Fasken Martineau found in more than 55 per cent of the 143 unsolicited offers that it studied led to a change of ownership once a target company was in play.
“A hostile bid is a relatively infrequent event in Canada: of the roughly 3,700 publicly listed companies in Canada, on average, only 14 were the target of a hostile bid in any given year over our 10- year study period,” said the report.
“Competitive scenarios occurred infrequently, but when they did, shareholders were the clear winners, and the hostile bidder was most often left emptyhanded.”