Husky Energy Inc. is walking away from its hostile takeover offer for MEG Energy Corp. after failing to win enough shareholder support.
Husky says there have also been several negative surprises in the market since it first announced its offer at the end of September last year.
READ MORE: MEG shares soar as analysts predict Husky will strengthen hostile takeover offer
The Calgary-based oilsands producer cited production cuts for the oil industry mandated by the Alberta government and a lack of progress on Canadian oil export pipeline developments.
In mid-December, A CIBC oil and gas analyst said the deterioration in crude oil prices made it unlikely that a better offer would emerge to force Husky Energy Inc. to sweeten its hostile takeover bid for the oilsands rival.
READ MORE: Husky Energy’s hostile takeover bid for MEG Energy now expected to succeed as proposed
Husky launched its stock-and-cash offer in September, but MEG rejected the bid as too low.
The takeover was worth about $3.3 billion when proposed, but by December it had fallen to about $2.5 billion because of deterioration in Husky’s share price.
The company’s offer for MEG expired Wednesday. All of the MEG shares that had been tendered to the offer will be returned to shareholders.
READ MORE: Husky Energy trims 2019 capital budget by $300M, criticizes Alberta oil curtailment plan
Earlier this month, Husky said it is launching a strategic review that could result in it getting out of selling fuels to consumers, after 80 years in that business.
Husky has more than 500 service stations, travel centres, cardlock operations and bulk distribution facilities nation-wide, from British Columbia to New Brunswick.
READ MORE: Husky Energy says it may sell 500 retail operations and Prince George refinery
It could also sell its small Prince George, B.C., refinery. The 12,000-barrel-per-day plant processes light oil into gasoline, diesel and other products for nearby regions of B.C.
Husky said it prefers to focus on its integrated corridor of upstream and downstream assets in Alberta, Saskatchewan and the U.S. Midwest, as well as offshore businesses in Atlantic Canada and the Asia Pacific region.
READ MORE: Husky Energy vows to boost downstream output if it wins MEG hostile takeover
The company said the decision was not related to the now-defunct MEG Energy takeover.