After a series of vote delays and bid enhancements, shareholders of MEG Energy Corp. have approved an $8.6-billion acquisition by Cenovus Energy Inc. The deal received overwhelming support with over 86% of shares voting in favor, surpassing the required two-thirds majority. Chairman James McFarland expressed gratitude to shareholders for their patience throughout the process.
The journey began in April when Strathcona Resources Ltd. made a cash-and-stock bid to acquire MEG, which was later rejected by MEG’s board. Following subsequent twists and turns, including a sweetened offer from Cenovus and a regulatory complaint causing a delay, the deal finally garnered approval.
MEG initially faced a takeover bid from Strathcona in June, which was labeled as “opportunistic” by MEG’s board. Despite efforts to find a better offer, MEG ultimately accepted a friendly takeover proposal from Cenovus in August. Strathcona later revised its bid to an all-stock offer, emphasizing future growth potential for investors.
In response to shareholder feedback, Cenovus increased its bid multiple times, leading to the withdrawal of Strathcona’s bid. Eventually, Strathcona agreed to vote its stake in favor of the Cenovus deal and entered a separate agreement to acquire assets from Cenovus.
The deal, which involves adjacent oilsands properties in Alberta, is expected to enhance cost efficiencies and increase Cenovus’s daily oilsands production by 110,000 barrels, with further growth anticipated in the coming years. The agreement signifies a significant consolidation within the oil and gas industry, with both companies optimistic about the synergies and benefits the merger will bring.