MEG spurns Husky, says $3.3B of­fer ‘sig­nif­i­cantly un­der­val­ues’ shares

Calgary Herald - - FINANCIAL POST -

CAL­GARY MEG En­ergy Corp. says its board is unan­i­mously rec­om­mend­ing that share­hold­ers re­ject Husky En­ergy Inc.’s $3.3-bil­lion hos­tile takeover of­fer made on Oct. 2.

In a news re­lease, the Cal­gar­y­based oil­sands com­pany says the of­fer “sig­nif­i­cantly un­der­val­ues” its shares and is not in the best in­ter­ests of the com­pany.

Husky is of­fer­ing a com­bi­na­tion of cash or shares worth $11 for each MEG share. The max­i­mum cash avail­able un­der the deal is capped at $1 bil­lion and the max­i­mum num­ber of shares lim­ited to 107 mil­lion.

Husky val­ues the trans­ac­tion at $6.4 bil­lion, in­clud­ing the as­sump­tion of $3.1 bil­lion in debt.

MEG chair­man Jef­frey McCaig says Husky’s of­fer doesn’t rec­og­nize the value of MEG’s as­sets, tech­nol­ogy, ex­per­tise and busi­ness prospects, not­ing that MEG is at an “in­flec­tion point” with a low-risk busi­ness plan that will gen­er­ate sig­nif­i­cant free cash flow start­ing in 2019.

Husky says it took its pro­posal di­rectly to share­hold­ers be­cause MEG’s board wouldn’t dis­cuss it. It says its of­fer is open un­til Jan. 16.

In its news re­lease, MEG says it is pro­duc­ing 100,000 bar­rels per day of bi­tu­men and has spent sub­stan­tially all the cap­i­tal re­quired to in­crease pro­duc­tion to 113,000 bpd by 2020.

GAVIN YOUNG

MEG’s board says Husky’s of­fer doesn’t rec­og­nize the value of MEG’s as­sets, tech­nol­ogy, ex­per­tise and busi­ness prospects.

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