MEG Energy Seeks Alternatives After Rejecting $4.4-Billion Bid From Strathcona
Canada’s Strathcona Resources supports MEG Energy in its process to explore potential mergers after MEG recommended that shareholders reject a $4.4 billion (C$6 billion) takeover offer from Strathcona.
Last month, Strathcona, MEG’s second-largest shareholder with about 9%, made an offer to acquire MEG Energy for the equivalent of some $4.4 billion in cash and stock. A deal would have turned the combined company into the fourth-largest oil producer among companies using team-assisted gravity drainage recovery technology in the oil sands. It would also have also resulted in the fifth-largest oil company in Canada overall, Strathcona said, positioning it for an investment-grade credit rating.
However, MEG Energy said earlier this week that its board of directors had determined that Strathcona’s unsolicited bid to acquire all of the issued and outstanding MEG shares is “inadequate, opportunistic, and NOT in the best interests of MEG or its shareholders.”
MEG warrants a premium valuation, which Strathcona’s offer fails to deliver, the company said. The board has authorized MEG to initiate a strategic review of alternatives with the potential to result in an offer superior to the company’s standalone plan.
In response to the rejected bid, Strathcona said on Friday that as MEG's second-largest shareholder, it welcomes the MEG Board’s efforts to market-test the offer against other acquisition proposals. Strathcona agrees that the MEG Board has a duty to fully investigate each proposal for the business, including the offer.
Strathcona fully supports MEG “contacting other potential acquirers to determine if a superior transaction to Strathcona's offer is available,” said Adam Waterous, Executive Chairman of Strathcona.
Strathcona continues to firmly believe its offer “provides a true win-win for MEG and Strathcona shareholders, uniting two heavy oil "pure plays" into a new Canadian oil champion, while delivering significant accretion to MEG and Strathcona shareholders on all key metrics,” the company said.
By Tsvetana Paraskova for Oilprice.com
Strathcona defends unsolicited takeover offer for oilsands peer MEG Energy
By The Canadian Press
June 20, 2025
CALGARY — Strathcona Resources Ltd. says MEG Energy Corp. has made errors and misleading statements in its justifications for rejecting its unsolicited takeover bid.
Last month, Strathcona made a cash-and-stock offer to buy all of the MEG shares it does not already own, and MEG shares have consistently been trading higher than the implied offer price.
Earlier this week, MEG urged shareholders to reject the bid, in part because it says combining with Strathcona would expose shareholders to inferior assets and capital market risk.
Strathcona has published a new presentation taking aim at the “Fact vs. Fiction” in MEG’s director’s circular outlining its rationale for opposing the offer.Stay on top of your portfolio with real-time data, historical charts and the latest news on the oil
In the presentation, Strathcona says its oilsands assets are comparable to or sometimes better than MEG’s.
It adds that Waterous Energy Fund, led by Strathcona executive chairman Adam Waterous, has no intention of selling its stake in Strathcona post-takeover, which MEG contends is a risk.
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Lauren Krugel, The Canadian Press
This report by The Canadian Press was first published June 20, 2025.
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