MEG Energy Corp. has extended the shareholder vote regarding the proposed acquisition by Cenovus Energy Inc., with an additional week delay. During a recent meeting, MEG’s board chair, James McFarland, halted proceedings twice to address a sudden “regulatory inquiry” before adjourning the meeting until November 6. This development marks the latest development in a contentious takeover battle that unfolded over several months, pitting Cenovus, a major player in the oilsands industry, against smaller competitor Strathcona Resources Ltd.
In a recent turn of events, Strathcona withdrew its all-stock bid earlier this month and, on Monday, committed to voting its 14% stake in MEG in favor of an improved offer from Cenovus. Additionally, Cenovus disclosed the sale of its Vawn thermal heavy oil asset in Saskatchewan and certain undeveloped land in western Saskatchewan and Alberta to Strathcona for $150 million, with an initial $75 million payment upon closure and a potential $75 million contingent on future commodity pricing.
“This meeting is adjourned with Cenovus’ approval to enable MEG to share additional details on the previously announced asset transaction between Strathcona Resources Ltd. and Cenovus, along with the MEG board’s related evaluation process,” stated McFarland.
The saga began in April when Strathcona initiated a cash-and-stock takeover bid for MEG, which was initially rejected. Subsequently, Strathcona directly approached MEG shareholders with their offer. MEG’s board criticized the bid as “opportunistic” and advised shareholders to dismiss it, prompting Strathcona to revise its offer to an all-stock deal. In response, MEG accepted a friendly takeover offer from Cenovus in August.
Cenovus later increased its bid and offered a higher equity share in early October. Both parties agreed to allow Cenovus to acquire up to 9.9% of MEG’s stock before the shareholder vote. Following this, Strathcona withdrew its bid, citing unattainable conditions, while some MEG shareholders voiced concerns over perceived unfair practices to secure the deal with Cenovus.
Cenovus and MEG possess adjacent oilsands assets at Christina Lake, located south of Fort McMurray, Alberta, with both companies highlighting the potential cost savings and operational efficiencies from a merger. Strathcona also operates steam-driven facilities in the same area. If the acquisition proceeds, Cenovus stands to gain an additional 110,000 barrels per day of oilsands production, boosting its portfolio to 720,000 boe/d, with projected growth to 850,000 boe/d by 2028.