The CEO of Canada’s Cenovus Energy pushed back on Friday against criticisms of his company’s bid for rival oil sands producer MEG Energy, telling Reuters the offer is fair and final.
Jon McKenzie made the comments a day after Cenovus issued a slide deck advocating for its cash-and-stock offer for the company.
Cenovus’ offer, made in August, would combine MEG’s Christina Lake operations with Cenovus’ adjacent assets, creating one of Canada’s largest oil sands companies producing more than 720,000 barrels per day.
MEG’s board has endorsed Cenovus’ bid, and it is set to be voted on by shareholders on October 9. But MEG has also received a rival hostile bid from Canadian oil company Strathcona Resources.
Some shareholders have criticized Cenovus’ bid, which at the time of offer valued MEG at C$27.79 per share, as undervaluing what is Canada’s last remaining pure-play oil sands company.
Strathcona recently revised its bid for MEG, offering an all-stock deal that at the time of offer valued the company at C$30.86 per share.
But McKenzie said MEG’s board chose Cenovus’ bid from among multiple offers, and said there is no precedent in Canada that would indicate MEG is worth more.
“There hasn’t been a transaction that’s been done on a pure bitumen play for a value in excess of what we’re offering,” he said.
The battle for MEG, which represents one of the Canadian oil sands’ few large-scale expansion opportunities, has become increasingly heated in recent weeks.
Strathcona executive chair Adam Waterous has accused Cenovus of resorting to “fear and misrepresentation to keep an upstart at bay” as well as “preying” on MEG’s board, which he has publicly called weak.
Strathcona, which is smaller than Cenovus and is backed by private equity firm Waterous Energy Fund, has been building its position in MEG, disclosing that it owns or controls about 14.2% of shares. CEO Adam Waterous has said his fund will vote against the Cenovus transaction at the upcoming MEG shareholder meeting, where two-thirds support is required.
McKenzie said Friday the contest has turned into a “bit of a circus.”
“That’s something we’re not really willing to participate in. We’re not going to get into a war of words,” he said.
(Reporting by Amanda Stephenson; Editing by Susan Fenton)