Boilers at the Cenovus Christina Lake oilsands facility, southeast of Fort McMurray, Alta. Earlier this month, Cenovus raised its bid for MEG Energy to $8.6-billion.AMBER BRACKEN/The Canadian Press
Cenovus Energy Inc. CVE-T said on Tuesday it has purchased about 21.7 million common shares of MEG Energy Corp. MEG-T ahead of a merger vote, bolstering its position as it prepares to acquire one of Canada’s last large pure-play oil sands companies.
Cenovus has acquired about 8.5 per cent of MEG’s 254.4 million outstanding shares since Oct. 8, and can purchase up to 9.9 per cent of MEG shares ahead of the merger vote, according to a revised standstill agreement between the companies.
While MEG’s board has approved Cenovus’s latest bid of $8.6-billion, including debt, the deal needs support from at least two-thirds of investors to go through.
MEG’s shareholder meeting has been postponed to Oct. 22 from Oct. 9 to allow investors more time to review the amended Cenovus proposal.
Strathcona ends hostile takeover bid for MEG Energy
Earlier this month, Cenovus raised its bid to beat Strathcona Resources Ltd. SCR-T out of the race for MEG.
Cenovus also amended its deal structure, shifting to a 50-50 mix of cash and shares, up from 75-per-cent cash and 25-per-cent stock, giving MEG investors a greater upside in the combined company.
The deal is expected to close early in the fourth quarter of 2025.
Strathcona has abandoned its takeover bid for MEG, ending its months-long battle with Cenovus.
The takeover saga began in May when Strathcona launched a $5.93-billion hostile bid for MEG, which Cenovus countered with a $7.9-billion cash-and-stock offer in August.
MEG’s Christina Lake oil sands project remains an important asset for its long reserve life, low operating costs and potential for production growth.
It is one of the few large-scale expansion opportunities in Canada’s oil sands that is now dominated by a small group of domestic players, after the exit of most foreign companies over the past decade.