Suncor to buy Canadian Oil Sands
Canadian oil and gas producer Suncor Energy Inc said on Monday it had reached an agreement to buy Canadian Oil Sands Ltd after raising its all-stock offer, valuing the deal at about C$4.24 billion ($2.93 billion) excluding debt.
The deal came days after Suncor's hostile bid for the company fell short of support from Canadian Oil Sands shareholders.
Alberta oil sands producers have been struggling with tumbling global crude oil prices, which slid to their lowest levels since 2003 on Monday over worries of a global supply glut.
Suncor will now offer Canadian Oil Sands shareholders 0.28 of a Suncor share for each Canadian Oil Sands share they hold, more than the initial bid of 0.25 shares offered in October.
The raised offer values Canadian Oil Sands at C$8.74 per share, which represents a premium of nearly 17 percent over the closing price of both stocks on the Toronto Stock Exchange on Friday.
Suncor made a bid for Canadian Oil Sands in October and later extended the offer until Jan. 8, promising shareholders improved operating efficiencies and a higher dividend.
In response to the hostile bid, Canadian Oil Sands adopted a shareholder rights plan that acted as a poison pill, and urged investors to reject what it called a substantially undervalued Suncor bid.
Seymour Schulich, a major Canadian Oil Sands investor, urged his fellow shareholders on Jan. 5 to reject the bid, saying Suncor was offering "an unacceptable price for an irreplaceable asset."
Suncor Chief Executive Steve Williams said on Monday the company was "pleased to have the support of the COS Board of Directors and shareholders, including Seymour Schulich, and have been advised of their intent to tender their shares."
Including Canadian Oil Sands' estimated debt of C$2.4 billion, the new deal is valued at about C$6.6 billion, the companies said in a statement on Monday.
Canadian Oil Sands has a 36.7 percent stake in Syncrude, the oil-sands mining consortium in northern Alberta that is Canada's largest single source of crude oil.
Suncor currently owns 12 percent of Syncrude, a stake that would rise to 49 percent with the takeover.
JP Morgan and CIBC World Markets are financial advisers to Suncor, while Blake, Cassels & Graydon LLP and Sullivan & Cromwell LLP are its legal advisers.
RBC Capital Markets, Osler, Hoskin & Harcourt LLP and Norton Rose Fulbright Canada LLP are advising Canadian Oil Sands.
Reporting by Amrutha Gayathri