The board of directors argued Strathcona Resources’s unsolicited $5.9-billion offer to buy up all outstanding MEG Energy shares is financially inadequate and not in the best interest of shareholders. (The Logic)
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The board of directors argued Strathcona Resources’s unsolicited $5.9-billion offer to buy up all outstanding MEG Energy shares is financially inadequate and not in the best interest of shareholders. (The Logic)
Talking point: If shareholders take up the offer, which is open until Sept. 15, it would make the merged companies Canada’s fifth largest oil producer, according to Strathcona. Strathcona offered in May to pay $4.10 and 0.62 Strathcona shares per MEG share, a price less than what MEG was trading at coming into Monday. The MEG board also argued Strathcona’s assets are inferior to MEG’s, scattered, and lack scale. The board also warned the combined companies could become a vehicle for Strathcona’s parent company, Calgary-based Waterous Energy Fund, to sell its ownership stake over time. Even the perceived risk of that selling pressure will drive down share prices, the board said. MEG is looking at alternatives in pursuit of a better deal. Its stock rose slightly on the news.
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