CALGARY – The Alberta Securities Commission has ruled that Canadian Oil Sands Ltd. can stall a hostile takeover bid by oilsands behemoth Suncor Energy for a month.
Although it gives the target company less time than it wanted to seek an alternative to Suncor’s unwelcome advances, COS said Monday it’s pleased with the decision.
“The ASC decision applies the reins to Suncor, who tried to stampede our shareholders,” said COS chairman Donald Lowry.
COS put in place a new shareholder rights plan, also known as a poison pill defence, shortly after Suncor (TSX:SU) took its all-stock bid directly to investors on Oct. 5.
The plan would have given COS shareholders 120 days, or until early February, to decide on Suncor’s offer. Suncor proposed to keep its bid open until Friday, threatening to walk away from the deal if the deadline was extended.
But the regulator saw merit with both sides’ arguments, giving COS shareholders until Jan. 4 to accept or reject the takeover.
Stephen Murison, chairman of the ASC panel, said it’s clear both companies are playing “hardball” in the dispute.
“Hardball is allowed,” he said.
He said the commission was not persuaded by Suncor’s argument that the poison pill would run counter to the wishes of COS shareholders.
He also said the ASC was satisfied that a process COS has underway to find a better deal is “real” and “active” and would benefit from more time. However, he said the commission was hard-pressed to understand why COS would need the full 120 days.
Suncor is reviewing the decision to determine its next steps, a company spokeswoman said in an email.
The COS shareholder rights plan is intended to buy the company time to find an alternative to the offer, which is worth about $4.5 billion based on Suncor’s closing share price Monday.
The tone of the debate between both companies has been outright nasty at times.
COS has said the Suncor offer is too low, opportunistic and exploitive and that the would-be buyer has resorted to “fear mongering” in its quest to snap up a bigger slice of the oilsands at a bargain price.
Suncor, meanwhile, has argued that given the likelihood of a prolonged downturn in oil prices, the status quo is risky for COS shareholders and that “hope is not a strategy.”
A COS financial adviser has said more time is needed because 25 other parties are kicking the tires. Of those, four had signed non-disclosure agreements.
At the centre of the Suncor-COS battle is the massive Syncrude oilsands mine north of Fort McMurray, Alta.
Both companies are partners in Syncrude — COS with 37 per cent and Suncor with 12 per cent. That means if Suncor is successful, it would own just under half of the mine.
Other than their interests in the project, the two companies have little else in common.
The Syncrude interest is COS’ only asset and the company does not have a hand in the day-to-day operations of the mine. At the end of last year, its workforce consisted of 23 full-time employees, four part-timers and three contractors.
Suncor, on the other hand, is the dominant oilsands player, with production of 430,300 barrels a day in the third quarter outside of Syncrude. At the end of 2014, it had nearly 14,000 employees, though it has cut at least 1,200 jobs this year.
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