Oil producer MEG Energy Corp. MEG-T on Monday urged its shareholders to reject a nearly $6-billion hostile takeover offer from Strathcona Resources Ltd. SCR-T, calling the bid inadequate and not in their best interest.
The board also launched a strategic review to explore alternatives that could lead to a better offer than MEG’s current plan to be a standalone company.
In May, oil and gas producer Strathcona Resources said it planned to launch a hostile takeover bid for MEG Energy, valuing its rival’s stock at $23.27 per share. MEG’s last close was $25.71.
Later, MEG advised its shareholders to not take action on the unsolicited takeover bid.
Since 2020, Strathcona, owned by Calgary-based private equity firm Waterous Energy Fund, has become one of the fastest-growing oil companies in North America through a series of acquisitions.
If the takeover were to go through, WEF would own 51-per-cent stake in the combined company, making it a vehicle for WEF and its investors to sell their material ownership over time, MEG Energy said.
“This selling pressure, or even the perceived risk of such selling pressure, will place immediate and significant downward burden on the share price of the combined company for a prolonged period of time,” the company said in a statement.
Strathcona Resources did not immediately respond to Reuters request for comment.