Suncor Energy Inc., Canada’s largest oil producer, has reached a deal to acquire rival Canadian Oil Sands Ltd.
The deal, valued at about C$4.24 billion (US$2.93 billion), came days after Suncor’s hostile bid fell short of support from Canadian Oil Sands shareholders, Reuters reported.
Suncor will now offer 0.28 of a Suncor share for each share held by Canadian Oil shareholders, up from the initial bid of 0.25 shares, the news agency said.
The new offer values Canadian Oil Sands at C$8.74 per share, a premium of nearly 17 percent over the closing price of both stocks on Friday.
In response to the hostile bid, Canadian Oil Sands had adopted a shareholder rights plan that acted as a poison pill, and urged investors to reject the offer.
Seymour Schulich, a major Canadian Oil Sands investor who had opposed the initial bid, said he was satisfied with the outcome.
“It’s the best we could do in the environment we’re in. I wish we had a better environment, but we didn’t,” Schulich told Reuters in an interview.
Including Canadian Oil Sands’ C$2.4 billion debt, the deal is valued at about C$6.6 billion.
With the takeover, Suncor’s 12 percent stake in Syncrude — the oil-sands mining consortium in northern Alberta in which Canadian Oil Sands has a 36.7 percent stake — would rise to 49 percent.
“It makes sense from the standpoint that Suncor has a lot of value to add to Syncrude,” said Scott Vali, portfolio manager and vice president, equities, at CIBC Asset Management, one of the biggest shareholders in COS.
“It’s a fair price for all parties involved.”
JP Morgan and CIBC World Markets are financial advisers to Suncor, while Blake, Cassels & Graydon LLP and Sullivan & Cromwell LLP are its legal advisers.
RBC Capital Markets, Osler, Hoskin & Harcourt LLP and Norton Rose Fulbright Canada LLP are advising Canadian Oil Sands.
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