Intensifying the Bidding War

The fierce competition to secure MEG Energy, the last of Canada's pure-play oil sands producers, has taken a thrilling turn. Strathcona Resources Ltd. has launched a bold new bid, challenging Cenovus Energy Inc.'s recent $7 billion offer to acquire MEG.

Strathcona's New Offer: A Game Changer

In a strategic move, Strathcona is now offering 0.8 of its shares for every share of MEG, translating to an impressive $30.86 per share. This equates to an estimated $7.85 billion deal, excluding MEG's debts. This is a notable increase from Cenovus's initial offer of $27.25 per share, which was announced on August 22.

Share Dynamics Shift

While Cenovus's offer primarily comprises cash with 25% in shares, Strathcona's latest proposal is a pure share deal. Back in May, Strathcona’s original offer included a mix of shares and $4.10 cash per MEG share, valued at about $23.27, or nearly $6 billion.

Investors Set to Benefit But with Uncertainty

Interestingly, the rising share prices of both companies have enhanced the relative valuations of their bids. Though Strathcona’s offer is entirely share-based, the company intends to reward its investors with a special dividend in the fourth quarter: $5.22 per share if the MEG acquisition is successful, or $10 per share if it's not.

Cenovus Holds Board Support, But for How Long?

Despite the enthusiasm surrounding Strathcona's aggressive bid, the Cenovus offer enjoys unanimous backing from MEG's board of directors. Approval of this deal, however, hinges on garnering two-thirds of votes at the upcoming shareholder meeting scheduled for October 9. Strathcona, holding a newly boosted 14.2% stake in MEG, is prepared to vote against the Cenovus proposal.

The Countdown Begins

Strathcona's enhanced bid remains on the table until October 20, keeping the pressure on both MEG and Cenovus. As this high-stakes bidding war unfolds, industry watchers are eagerly anticipating the next moves in this battle for control over one of Canada's key energy players.