Suncor Energy Announces C$4.3B Bid for Canadian Oil Sands
The wave of mergers has traveled far and wide across the energy sector. The latest one to join the growing trend of mergers is Canada’s biggest energy firm and the largest oil sands outfit Suncor Energy Inc. (SU – Analyst Report). The firm has made an unsolicited offer to Canadian Oil Sands Limited (COSWF – Snapshot Report) to buy all the outstanding shares of the latter. The deal is valued at approximately C$4.3 billion. The deal would also entail the assumption of Canadian Oil Sands’ outstanding debt of about C$2.3 billion as of Jun 30, 2015.
Shares of Suncor Energy fell about 1.5% post this announcement. However, Canadian Oil Sands’ stock, which trades on the Toronto Stock Exchange, surged over 55% on the news.
Offer Terms
Per the proposal, Canadian Oil Sands’ shareholders will receive 0.25 Suncor shares for each share they hold. The offer represents a 43% premium based on the closing prices of Canadian Oil Sands and Suncor as on Oct 2.
Canadian Oil Sands has till Dec 4, 2015 to accept the offer unless the bid is extended or cancelled. The deal requires approval from two-third of Canadian Oil Sands’ shareholders.
Offer Benefits for Canadian Oil Sands
Apart from being merged with the leading Canadian integrated energy company, the offer would give Canadian Oil Sands shareholders an opportunity to benefit from Suncor’s growing dividends. Acceptance of the offer would mean a 45% dividend growth for Canadian Oil Sands shareholders.
