Cenovus agreed to buy MEG in a cash-and-stock deal earlier in August, following MEG’s board’s rejection of Strathcona’s lower C$6 billion takeover bid in June.
Canada’s Strathcona Resources (SRC) said on Thursday it is looking to acquire more shares of Meg Energy to thwart the latter company’s C$7.9 billion ($5.72 billion) takeover by Cenovus Energy.
Cenovus agreed to buy MEG in a cash-and-stock deal earlier in August, following MEG’s board’s rejection of Strathcona’s lower C$6 billion takeover bid in June.
The company also stated that it intends to vote against the Cenvous deal during the special meeting of MEG shareholders, scheduled for Oct. 9, after discussing the matter with fellow shareholders. “Purchases of MEG Shares will occur as soon as practicable and from time to time, in each case in accordance with applicable securities laws,” the company said in a statement.
Strathcona already owns 23.4 million MEG Shares, representing about 9.2% of the company’s outstanding shares. It now aims to boost its stake in MEG Energy to 14.2%.
Retail sentiment on Stocktwits about Cenovus was in the ‘bullish’ territory at the time of writing, while traders were ‘neutral’ about MEG.
The deal between Cenovus and MEG aims to create one of the largest oil sand producers in Canada by combining their assets in the Christina Lake area. The merged entity is expected to have a combined oil sands production of over 720,000 barrels per day (bbls/d).
Eric Nuttall, Partner and Senior Portfolio Manager at Ninepoint Partners, stated in an interview with BNN Bloomberg that he was disappointed with the deal and that Cenvous virtually got a “steal” deal.
According to a Reuters News report, Strathcona’s executive chair, Adam Waterous, reportedly stated that the firm will continue to engage with MEG shareholders before the September 15 tender deadline for its offer.
U.S.-listed shares of Cenovus have gained 10.7% this year.
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