CALGARY – Suncor Energy has raised the stock portion of its takeover offer for Canadian Oil Sands (COS) by 12 per cent, resulting in a $6.6-billion friendly deal that ends a public battle between the two Calgary-based companies.
Suncor is now offering to exchange 0.28 of a share for each share of Canadian Oil Sands – up from 0.25 of a Suncor share per COS share.
Because the offer is primarily an exchange of shares, its monetary value will fluctuate. Based on Friday’s closing stock price for Suncor stock, the new offer was worth $8.74 per COS share, up from $7.81 under the original formula.
The stock portion would be worth $4.2 billion, up from $3.8 billion under the old formula, if all COS shares are tendered. The total value of the deal includes $2.4 billion in debt that Suncor will assume.
The companies issued a joint statement saying both boards of directors and major Canadian Oil Sands investor Seymour Schulich are supporting the revised offer, which will expire at 4 p.m. MT (6 p.m. ET) on Feb. 5 – nine days later than the Jan. 27 deadline that Suncor set after its original bid failed to win sufficient support from COS shareholders.
Schulich had lobbied against the previous Suncor bid and bought full-page ads in several major newspapers to advise fellow shareholders to reject the price they were originally offered.
“Since Suncor made its initial offer, our board has remained steadfast in our commitment to maximize value for all shareholders. This agreement fulfills that commitment, providing our shareholders with a higher exchange ratio for their shares despite a 37 per cent decline in spot oil prices,” Don Lowry, chairman of Canadian Oil Sands, said Monday.
Schulich said in the same statement that he encouraged other COS shareholders to join him in accepting the new offer, which is still subject to certain conditions.
Suncor wants at least 51 per cent of the COS shares – a relaxed condition since the original had sought at least 66.6 per cent. The Canadian Oil Sands board has agreed to pay a $130 million break fee to Suncor if certain conditions aren’t met.
If accepted, Suncor will become by far the largest shareholder in the Syncrude oilsands complex, which is operated by Imperial Oil.
“We are 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” Suncor president and CEO Steve Williams said.
“Together, we’re bringing this full, fair and final offer to COS shareholders and we encourage everyone to tender their shares.”