Last day for COS shareholders to decide on Suncor Energy hostile takeover bid

CALGARY -- Shareholders in Canadian Oil Sands have until this evening to decide whether to accept a takeover offer from Canada's dominant oilsands producer.

See Full Article

Suncor's Energy's hostile all-stock bid, worth just over $4 billion, expires at 6 p.m. MT on Friday. It needs two-thirds support to go through.

COS shares closed at $7.47 on the Toronto Stock Exchange on Friday, about 10 per cent below the value of the bid based on Suncor's closing share price Friday.

Suncor has said the likelihood of an improved offer was negligible, adding that it was prepared to walk away and move on to other opportunities if it didn't garner enough support by the deadline.

At the crux of the battle is the outlook for oil.

U.S. benchmark crude settled at a paltry US$33.16 a barrel on Friday.

COS is focused entirely on its 37 per cent share of the Syncrude oilsands mine north of Fort McMurray, Alta., making it particularly exposed to swings in commodity prices.

Suncor, whose 12 per cent stake in Syncrude represents a small slice of its oilsands holdings, believes oil prices will remain low for a long time and says COS shareholders face an uncertain future if they say reject the deal.

The leadership of COS says the best way forward is for it to stay independent and that it's poised to prosper once crude prices recover.

Bradley Freelan, a partner at law firm Fasken Martineau who focuses on mergers and acquisitions, said there are a number of possible scenarios that could play out once the deadline passes.

  • The bid simply lapses. "The deadline happens, not enough shares are tendered and Suncor just lets the bid expire in accordance with its terms and that's it."
  • Suncor gets some support, but not enough to close the deal. Suncor extends the bid in its current form for 10 days in the hope enough shareholders decide to jump on board to get it past the finish line.
  • Suncor gets a strong level of support, but is still shy of the two-thirds requirement. The company amends its offer to waive the two-thirds condition and extends it.
  • More than two-thirds of COS shares are tendered to the bid and Suncor acquires its target.
  • A friendly deal between the two companies is announced: a possible, but by no means probable, outcome.
  • A last-minute white knight bidder emerges. This would seem to be a remote possibility. The Alberta Securities Commission in December decided to give COS another month to stave off Suncor's offer with what's known as a "poison pill" defence. In that time, no alternative deal has emerged despite COS having said that 25 other parties had shown some degree of interest.

It may be a little time before Suncor announces its next move.

"I will watch with very close attention as the tenders come in," CEO Steve Williams said on a conference call this week. "We'll make the judgment through the weekend as to whether we believe we will be able to move to closing the deal out."



Advertisements

Latest Economic News

  • CPTPP trade deal text is released

    Economic CBC News
    The final version of a landmark deal aimed at cutting trade barriers in some of the Asia-Pacific's fastest-growing economies was released on Wednesday, signalling the pact was a step closer to reality even without its star member the United States. Source
  • B.C. unveils housing plan that raises foreign buyers levy and taxes speculators

    Economic CTV News
    VICTORIA -- British Columbia is raising its foreign buyers tax and expanding it to areas outside of Vancouver, while bringing in a new levy on speculators, as part of a sweeping plan to improve affordability in the province's overheated housing market. Source
  • B.C. government introduces new speculation tax and raises foreign buyers tax

    Economic CBC News
    The B.C. government delivered on a wide variety of promises from its election platform and throne speech in its first budget, forecasting a $219 million surplus for the upcoming fiscal year on the strength of a strong economy. Source
  • Canadian bank earnings forecast bright but housing, NAFTA cloud outlook

    Economic CBC News
    The forecast for Canada's biggest banks is bright thanks to U.S. tax reform and higher interest rates, but as they report first-quarter results this week, domestic mortgage demand and the North American Free Trade Agreement could cloud the long-term outlook, analysts say. Source
  • Competition Bureau reaches settlement with Leon's and the Brick

    Economic CTV News
    OTTAWA - The Competition Bureau says it has reached an agreement with Leon's Furniture Ltd. and the Brick Ltd. regarding allegations of deceptive marketing practices. As part of the settlement, Leon's and the Brick have agreed to each donate $750,000 worth of home furnishings over two years to charities to be approved by the regulator. Source
  • Competition Bureau settles with Leon's, The Brick over marketing practices

    Economic CBC News
    The Competition Bureau says it has reached an agreement with Leon's Furniture Ltd. and the Brick Ltd. regarding allegations of deceptive marketing practices. As part of the settlement, Leon's and The Brick have agreed to each donate $750,000 worth of home furnishings over two years to charities to be approved by the regulator. Source
  • Pipeline backlogs to cost Canadian economy $10.7B this year: Scotiabank

    Economic CTV News
    CALGARY -- Delayed oil pipeline construction is causing a steep discount for Canadian crude prices that is costing the economy roughly $15.6 billion a year or about 0.75 per cent of GDP, according to Scotiabank. Source
  • Pipeline backlogs could cost Canadian economy $15.6B a year: Scotiabank

    Economic CTV News
    CALGARY -- Delayed oil pipeline construction is causing a steep discount for Canadian crude prices that is costing the economy roughly $15.6 billion a year, according to Scotiabank. "Pipeline approval delays have imposed clear, demonstrable and substantial economic costs on the Canadian economy," said bank chief economist Jean-Francois Perrault in a report Tuesday. Source
  • Don't fall for the staging: Real estate expert on how to avoid rookie buyer mistakes

    Economic CTV News
    Being a first-time home buyer without guidance from qualified professionals is like using the internet to diagnose a serious illness -- it’s not going to end well. That’s the advice Toronto real estate agent and industry expert Karyn Filiatrault gives to millennials looking to enter the housing market. Source
  • Trump government expected to defend tariffs on Canadian solar modules in court

    Economic CBC News
    President Donald Trump's decision to hit imports of Canadian solar energy modules with staggering tariffs, starting this month, has sparked another court battle over the extent of his powers to push through his America First agenda. Source