Toronto, Aug 23 (V7N) – Canadian oil sands producer Cenovus Energy (CVE.TO) announced on Friday that it will acquire MEG Energy (MEG.TO) in a C$7.9 billion (approximately $5.68 billion) cash-and-stock transaction. This acquisition ends weeks of speculation that Cenovus would step in as a white knight for MEG, which had been facing a hostile takeover attempt.
 
The deal, subject to shareholder approval, outbids the rival offer from Strathcona Resources (SCR.TO), which had proposed a C$6 billion takeover earlier in June. MEG’s board rejected Strathcona’s offer as inadequate.
 
The acquisition will create one of Canada’s largest oil sands companies by combining MEG’s Christina Lake oil sands operations in northern Alberta with Cenovus’ adjacent assets. The merged entity expects to produce over 720,000 barrels of oil per day (bpd) from oil sands operations.
 
Cenovus CEO Jon McKenzie stated in a conference call that the company plans to increase oil sands production to over 850,000 bpd by 2028. McKenzie added that production at MEG’s Christina Lake site could grow to more than 150,000 bpd by improving the steam-to-oil ratio and employing enhanced well designs.
 
Industry analysts had anticipated Cenovus as a likely bidder for MEG, a smaller oil sands firm. Following the rejection of Strathcona’s bid, MEG’s board had sought other offers.
 
Strathcona’s Executive Chair, Adam Waterous, responded via email stating the company will continue to engage with MEG shareholders ahead of the September 15 tender deadline for its offer.
 
Chris MacCulloch, an analyst at Desjardins, noted that Cenovus might need to improve its offer before the planned shareholder vote in October. He said the significant cash portion of Cenovus’ bid is likely more attractive to MEG shareholders than Strathcona’s offer, especially given the superior synergy potential.
 
Cenovus Energy’s shares rose more than 4% in morning trading following the announcement. The offer values MEG’s equity at approximately C$6.93 billion, representing a 27.9% premium to MEG’s closing price before Strathcona launched its unsolicited bid in May.
 
Under the agreement, MEG shareholders will receive 75% of the consideration in cash and 25% in Cenovus shares, with assumed debt included in the transaction. MEG’s board has approved the deal, which is expected to close in early Q4 of 2025.
 
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