The executive chair of Canadian oil and gas producer Strathcona Resources said on Friday the company will not consider upping its offer for MEG Energy unless the oil sands firm engages to explain why it is worth a higher valuation.
Adam Waterous said in an interview that Calgary-based Strathcona has not had any discussions with MEG since announcing its C$6 billion ($4.38 billion) hostile takeover bid for the company in mid-May.
On Monday, MEG advised shareholders to reject the offer, describing it as inadequate and not in their best interests. The firm instead launched a strategic review aimed at attracting potential competing bids from other companies.
Waterous said MEG’s stance was unusual in that the board publicly criticized Strathcona’s assets and ownership structure without seeking to engage with the company first.
He said Strathcona remains keen to discuss its offer with MEG’s board, adding that Strathcona cannot consider revising its bid if that does not happen.
“We’d obviously have to be invited into the process and have MEG tell us what value they think we haven’t incorporated,” Waterous said.
MEG’s board declined to comment on Friday, pointing instead to a statement from Monday laying out its reasons for recommending against Strathcona’s proposal.
Strathcona, which is backed by Calgary-based private equity firm Waterous Energy Fund, is MEG’s second-largest shareholder, owning approximately 9% of the company’s shares at the time it made its offer.
Waterous said Strathcona welcomes efforts by MEG’s board to market-test its offer against other potential acquisition proposals.
Some analysts have suggested larger oil sands players could mount a bid for MEG, but no other company has publicly expressed interest so far.
MEG’s share price has climbed 25% since Strathcona made its offer.
Since 2020, Strathcona has become one of the fastest-growing oil companies in North America through a series of acquisitions. Its all-cash-and-stock offer for MEG would combine two of Canada’s largest pure-play thermal oil sands operators and make Strathcona the country’s fifth-largest oil producer.
(Reporting by Amana Stephenson in Calgary and Anusha Shah, additonal reporting by Gursimran Kaur in Bengaluru; Editing by Tasim Zahid and Nia Williams)