MEG Energy Corp.’s shareholder vote regarding a potential acquisition by Cenovus Energy Inc. has been postponed for another week. During a meeting, MEG’s board chair, James McFarland, halted proceedings twice on Thursday to address a sudden “regulatory inquiry” before rescheduling the meeting for November 6.
This development marks a new chapter in the ongoing takeover battle between Cenovus, a major player in the oilsands sector, and the smaller competitor Strathcona Resources Ltd. Strathcona recently withdrew its all-stock bid and confirmed its intention to support Cenovus’ improved offer by voting its 14 percent stake in MEG in favor of the deal.
In a related move, Cenovus revealed the sale of its Vawn thermal heavy oil project in Saskatchewan and certain undeveloped lands in western Saskatchewan and Alberta to Strathcona for $150 million. The transaction includes an initial cash payment of $75 million, with a potential additional $75 million based on future commodity prices.
James McFarland explained the adjournment of the meeting as a decision made in collaboration with Cenovus to allow MEG to disclose further details about the asset transaction between Strathcona and Cenovus, along with the MEG board’s review process.
The takeover saga began earlier this year when Strathcona initiated a cash-and-stock bid for MEG, which was rejected by MEG’s board. Subsequently, Strathcona directly approached MEG shareholders with its offer. MEG’s board criticized the bid as “opportunistic” and advised shareholders to turn it down while exploring alternative proposals.
In August, MEG accepted a friendly takeover bid from Cenovus, prompting Strathcona to adjust its offer to an all-stock arrangement in a bid to provide investors with better future growth prospects. Cenovus responded with an increased bid in October, which included a higher equity share and permission to acquire up to 9.9 percent of MEG’s stock before the shareholder vote.
Following Strathcona’s withdrawal due to unsatisfactory conditions, concerns were raised by some MEG shareholders regarding the tactics employed to secure the deal with Cenovus. Both Cenovus and MEG own oilsands assets near Christina Lake, south of Fort McMurray, Alberta, and have highlighted the potential cost savings and operational synergies from a combined entity.
The proposed acquisition would enhance Cenovus’s daily oilsands production by 110,000 barrels, raising it to 720,000 barrels of oil equivalent per day. Cenovus anticipates that output could reach 850,000 barrels of oil equivalent per day by 2028, should the deal proceed as planned.
