MEG Energy Corp. shareholders will have to wait an additional week to vote on the proposed acquisition by Cenovus Energy Inc. The delay came after MEG board chair James McFarland halted a meeting twice on Thursday to address a sudden “regulatory inquiry” before rescheduling it for November 6.
This development is the latest twist in the prolonged battle for takeover, with Cenovus Energy, a major player in the oilsands sector, competing against the smaller bidder, Strathcona Resources Ltd. Strathcona recently withdrew its all-stock bid and pledged to vote its 14 percent stake in MEG in support of Cenovus’ revised offer.
In a strategic move, Cenovus also disclosed the sale of its Vawn thermal heavy oil operation in Saskatchewan and some undeveloped land in western Saskatchewan and Alberta to Strathcona for $150 million. The deal includes an initial $75 million cash payment upon closing and a potential additional $75 million based on future commodity prices.
McFarland stated, “This adjournment has been agreed upon by Cenovus to allow MEG to disclose further details regarding the asset transaction between Strathcona Resources Ltd. and Cenovus, as well as the MEG board’s decision-making process.”
The saga began in April when Strathcona initiated a cash-and-stock takeover bid for MEG, which was initially rejected. Subsequently, Strathcona directly engaged with MEG shareholders. Despite MEG’s board dismissing the bid as “opportunistic” and calling for its rejection, Strathcona persisted, prompting MEG to seek a better offer.
In August, MEG accepted a friendly takeover proposal from Cenovus, leading to a revised bid from Strathcona based solely on stock considerations. Cenovus responded by enhancing its offer, offering a larger equity stake and permission to acquire up to 9.9 percent of MEG’s shares before the shareholder vote.
Following Strathcona’s withdrawal due to unmet conditions, concerns were raised by some MEG shareholders about perceived unfair tactics employed to secure the deal with Cenovus. Both Cenovus and MEG possess oilsands assets in close proximity at Christina Lake, with anticipated synergies in cost reduction and operational efficiencies. Strathcona also operates steam-driven projects in the same region.
If the acquisition proceeds, it would boost Cenovus’ daily oilsands production by 110,000 barrels, elevating its total output to 720,000 boe/d, with projections indicating potential growth to 850,000 boe/d by 2028.
