Canadian Oil Sands issues 'Declaration of Independence' as takeover rhetoric heats up

CALGARY -- The hostile takeover battle between oilsands giant Suncor Energy and its target, Canadian Oil Sands, could be resolved soon, with both companies revving up their rhetoric ahead of a Friday deadline.

See Full Article

Suncor said Monday that it will move on to other opportunities if, by Friday evening, it does not receive "substantial support" for its $4.3-billion, all-stock offer.

Meanwhile, COS issued what it called a "declaration of independence," reiterating its view that shareholders are better off in the long run if the company continues on in its current form, despite continued weakness in crude prices.

Both companies are partners in the Syncrude oilsands mine north of Fort McMurray, Alta., -- COS with 37 per cent and Suncor with 12 per cent.

COS's main asset is its Syncrude stake, whereas Suncor (TSX:SU) is one of Canada's biggest energy names, with vast operations in the oilsands and a host of other refining and offshore holdings.

Because COS (TSX:COS) is so focused, it's more exposed than most to swings in crude prices -- both on the downside and the upside.

"You invested in Canadian Oil Sands for a pure-play exposure to oil prices and you have held your investment through unprecedented hard times in the energy sector," board chairman Don Lowry said in the public letter to shareholders, which also appeared in full-page newspaper ads.

"Now is the time to secure the future benefits of an independent Canadian Oil Sands."

COS's management and board of directors have slammed the Suncor offer as too low and opportunistic and accused it of fear mongering. Suncor needs at least two-thirds support from COS shareholders for the bid to go through.

In an interview, Suncor CEO Steve Williams said in order to justify keeping up the pursuit, Friday's tender results would need to be "close enough that I have a high degree of confidence the deal will close."

He said the prospects of a sweetened offer are "very low," noting ongoing operational glitches at Syncrude and a deterioration in crude prices since Suncor first took its offer to straight to shareholders in October -- from close to US$50 a barrel then to below US$40 a barrel now.

"If we were going to be making the bid today, it would not be at this level," Williams said.

And although Suncor has been expending a lot of time and effort chasing COS, it has a team screening a wide array of other potential deals, Williams said.

And if Suncor does end up walking away from its offer, the two companies would still have to work together at the Syncrude boardroom table.

"This is not personal. This is a business transaction. I certainly think it will make it a little bit more testing, but as far as Suncor is concerned, we've tried to keep this friendly," said Williams.

"Unfortunately, Canadian Oil Sands didn't want a friendly arrangement. Every time we've been doing anything, we've been requesting Canadian Oil Sands to call us. They've not returned any of those calls. But there's certainly not been any animosity on Suncor's part. . . . We're trying to do the best for Canadian Oil Sands shareholders and Suncor shareholders."



Advertisements

Latest Economic News

  • 2 more leaks found along Dakota Access pipeline

    Economic CTV News
    BISMARCK, N.D. -- The Dakota Access pipeline system leaked more than 100 gallons of oil in North Dakota in two separate incidents in March -- the second and third known leaks discovered as crews prepared the disputed $3.8 billion pipeline for operation. Source
  • Philippe Couillard says Quebec needs to take care of Bombardier

    Economic CTV News
    HAIFA, Israel -- Quebec's premier says the province needs to take care of Bombardier because of its unique importance to the province. Philippe Couillard is urging Quebecers to support the transportation company, which has recently faced a strong public backlash over planned hikes to executive pay. Source
  • Canadian banks set to reveal 1st earnings since CBC coverage on sales practices

    Economic CBC News
    The Canadian banks are expected to benefit from rising U.S. interest rates and fewer bad loans in the oilpatch as they start reporting their latest quarterly results this week, but analysts say worries about the housing market and consumer debt remain key concerns. Source
  • U.S. stocks higher Monday while TSX closed for May holiday weekend

    Economic CBC News
    U.S. stocks are higher Monday as the market bounces back from a turbulent week. Defence contractors are making gains and technology and consumer-focused companies are also rising. Ford is up after it replaced CEO Mark Fields, while chemicals maker Huntsman is rising after it agreed to combine with Swiss competitor Clariant. Source
  • Graduating? 5 tips from a millennial on taking control of your debt

    Economic CTV News
    High financial expectations coupled with harsh employment realities have left recent post-secondary graduates feeling a little anxious and overwhelmed. According to TD, the competitive job market, lower than anticipated income and higher than expected costs are just some of the realities facing post-secondary graduates. Source
  • Greece looks for debt help after backing further cuts

    Economic CTV News
    BRUSSELS -- Greece is seeking Monday to persuade its creditors in Europe that it has done enough to get another chunk of bailout loans and a firm commitment on alleviating Athens' hefty debt burden. Greek Finance Minister Euclid Tsakalotos is meeting his counterparts from the 19-country eurozone at a meeting in Brussels, where Greece will once again be top of the agenda. Source
  • Concerns over housing, indebted consumers weigh on banks as they report Q2 results

    Economic CTV News
    TORONTO -- The Canadian banks are expected to benefit from rising U.S. interest rates and fewer bad loans in the oilpatch as they start reporting their latest quarterly results this week, but analysts say worries about the housing market and consumer debt remain key concerns. Source
  • Australian iron ore magnate donates $300 million to charity

    Economic CTV News
    CANBERRA, Australia -- Iron ore mining magnate Andrew Forrest said Monday he was donating 400 million Australian dollars (US$300 million) to charities in what has been described as a new record in Australian philanthropy. Forrest, the 55-year-old chairman of Fortescue Metal Group, and his wife, Nicola, announced the money will be spent on cancer research, Australian university research, supporting disadvantaged people including Aborigines, and fighting slavery around the world. Source
  • Chinese online retailer developing one-ton delivery drones

    Economic CTV News
    BEIJING -- China's biggest online retailer, JD.com Inc., announced plans Monday to develop drone aircraft capable of carrying a ton or more for long-distance deliveries. The company said it will test the drones on a network it is developing to cover the northern Chinese province of Shaanxi. Source
  • Germany, France pledge new effort to strengthen eurozone

    Economic CTV News
    BERLIN -- Germany and France pledged Monday to seek ways to strengthen the eurozone, with harmonization of corporate taxes among possible measures that they will mull in the coming weeks. German Finance Minister Wolfgang Schaeuble and new French counterpart Bruno Le Maire said they are setting up a working group to produce proposals for a planned bilateral summit in July. Source