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Three vote delays, two sweetened offers and countless other twists and turns later, MEG Energy Corp. shareholders. gave their blessing to the takeover of Cenovus Energy Inc. for 8.6 billion dollars.
More than 86 percent of shares voted in favor of the deal, well above the two-thirds majority required to pass, MEG Chairman James McFarland said at a special meeting Thursday.
He thanked shareholders for their “patience over the past few weeks.”
The meeting was originally supposed to take place on October 9, but was delayed by two weeks when Cenovus first changed its proposal. It was then delayed another week when it emerged that the proposal still did not have enough shareholder support to pass. Then, last week, a meeting to consider the proposal (sweetened for a second time) was postponed until Thursday due to a last-minute regulatory complaint.
Richard Masson, executive fellow at the University of Calgary School of Public Policy, explains what the recent deal between Cenovus Energy and MEG Energy means for Canada's oil and gas industry.
The saga began in April when another company, Strathcona Resources Ltd., approached MEG's board with a cash-and-stock takeover bid. Strathcona was rejected and a few weeks later sent the offer directly to MEG shareholders.
In June, MEG's board called the offer “opportunistic” and called on shareholders to reject it as it launched a review to find a better offer. Strathcona executive chairman Adam Waterous accused MEG of refusing to participate and of taking the position of “anyone but Strathcona”.
In August, MEG announced that its board of directors had accepted Cenovus' friendly takeover offer. The following month, Strathcona changed its offer to an all-share offer, arguing that the structure would give investors greater opportunity to benefit from future growth.
Cenovus, saying it is listening to shareholder feedback, raised the rate and offered a larger equity stake in early October.
Strathcona abandoned his application days later, saying the terms of her offer could no longer be met.
Last week, Cenovus again increased its offer, with Strathcona agreeing to vote in favor of the deal with its 14.2% stake in MEG.
On the same day, the companies announced that Strathcona had agreed to buy Cenovus' Vawn heavy oil operation in Saskatchewan and certain undeveloped properties in western Saskatchewan and Alberta for up to $150 million.
That side deal caused the latest delay to the vote as McFarland said more time was needed to disclose information to MEG shareholders. Cenovus CEO John McKenzie later said a former MEG employee who owned 4,000 shares had filed an unspecified complaint.
Cenovus and MEG own adjacent oil sands properties at Lake Christina, south of Fort McMurray, Alta., and the companies tout the cost savings and efficiencies that will result from joining forces. Strathcona also has steam operations in the region.
The deal will add 110,000 barrels of daily oil sands production to Cenovus' portfolio, bringing it to 720,000 barrels of oil sands per day. Cenovus said production could rise to 850,000 barrels per day in 2028.
