Cenovus argues its revised offer to MEG Energy shareholders for the Strathcona acquisition
In a significant turn of events, the Waterous Energy Fund has announced its intention to vote against Cenovus Energy's proposed transaction at the MEG Energy shareholder meeting, scheduled for October 9.
Adam Waterous, the CEO of Waterous Energy Fund, has publicly stated that his fund will vote against the Cenovus transaction. The fund, which holds a substantial 14.2% of shares in MEG Energy, is supported by Strathcona, another player in the oil and gas industry.
The crux of the disagreement seems to centre around the revised bid by Strathcona Resources. Initially, Strathcona made a bid that combined cash and stock, but the latest offer is solely in shares. The current value of the revised bid stands at C$30.86/share, up from the previous C$28.02.
Strathcona Resources, in a hostile move, has offered 0.8 of a share for each MEG share it does not already own. However, Cenovus Energy argues that Strathcona's shares are "illiquid and overvalued relative to peers." The oil company further claims that the Strathcona offer carries significant downside risk if Strathcona's shares decline post-deal.
On the other hand, Cenovus Energy's offer is considered "fair and final" by its CEO, Jon McKenzie. The company has issued a slide presentation to support its arguments for MEG Energy shareholders to accept its offer.
It's important to note that two-thirds support is required for the Cenovus transaction to be approved at the shareholder meeting. The Waterous Energy Fund's opposition could potentially sway the vote, but the exact date when MEG Energy shareholders will vote on Cenovus Energy's takeover offer has not been specified.
This proposed transaction does not have a precedent in Canada for being worth more than the current offer by Strathcona Resources. The outcome of the vote on October 9 could shape the future of MEG Energy and potentially set a new precedent in the Canadian oil and gas industry.
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