CALGARY – Shares in oilsands producer MEG Energy Corp. continued to slide Friday after a credit rating agency said rival Husky Energy Inc.’s failure to consummate a hostile takeover bid was actually “credit positive” for Husky.
After falling 35.6 per cent on Thursday, MEG stock traded down by as much as 3.3 per cent on Friday morning on the Toronto Stock Exchange.
Husky, after gaining 12.4 per cent Thursday, fell by as much as 4.2 per cent Friday.
Husky’s decision to abandon its bid for MEG after more than 50 per cent of the shares were tendered by Wednesday afternoon’s deadline surprised most financial analysts who had expected it to extend more time to try to achieve the two-thirds support it needed.
Moody’s Investors Service, however, says the failure of the deal means Husky is avoiding taking on MEG’s high debt load and a subsequent erosion in its credit worthiness.
It says by not adding MEG’s raw bitumen production, Husky will avoid a deterioration in its balanced integration of upstream and downstream operations that have protected it from recent steep discount prices for western Canadian crude.
“Husky Energy’s decision to abandon its hostile bid for MEG Energy represents a lost opportunity in our eyes — and one that may dent its credibility,” said RBC Capital Markets analyst Greg Pardy in a report issued late Thursday.
“But the company’s balance sheet remains strong, with dividend growth that could move into sharper focus.”