Canadian Oil Sands claims victory, calls for Suncor to disclose results

CALGARY -- Canadian Oil Sands is claiming victory in a bitter oilpatch takeover battle, but says shareholders deserve to know exactly how much support the hostile $4-billion bid from Suncor Energy garnered before it was extended past its Friday night deadline.

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Oilsands giant Suncor's all-stock offer now is open until Jan. 27 under the same terms: a quarter of a Suncor share for each COS share.

The extension gives Suncor more time to make its case to shareholders and weigh its options. But COS on Monday urged its shareholders to reject the takeover as it currently stands.

"While only Suncor has access to all the tender results, the best information that COS currently has is that a strong majority of COS shareholders rejected the substantially undervalued and opportunistic Suncor bid," the target company said in a release.

"COS believes that immediate disclosure of the number of shares tendered is required under Canadian and U.S. securities law in this situation as a material fact that would reasonably be expected to affect the decision of shareholders to accept or reject the Suncor bid."

Bradley Freelan, a partner at law firm Fasken Martineau who specializes in mergers and acquisitions, said it can be inferred from Suncor's move that less than half of COS shares were tendered to its bid.

"They may as well just extend and figure out what they want to do next, perhaps increase the price and then see what kind of support they can get with perhaps a higher price," he said.

"Maybe they're in discussions with some of their more significant shareholders to see if there's a price where they would do a deal."

Prominent businessman Seymour Schulich, who has said he owns five per cent of COS, has vocally opposed the Suncor bid in its current form.

Suncor CEO Steve Williams said in an interview last week that he'd need to have a "high degree of confidence" that a deal would eventually close in order to keep up the pursuit.

On Monday, Williams issued a brief statement -- his first since Suncor announced the extension on Friday -- but didn't disclose how many shares Suncor has received.

"We are encouraged by the number of shares that have been tendered," Williams said. "We have decided to extend the offer in order to allow shareholders to continue to tender to the offer."

COS shares were relatively unchanged Monday at around $7.50 a share in midday trading. That's around 10 per cent below the current value of the Suncor bid. Williams has warned that COS shares could tumble as low as $5 a share if the Suncor offer is taken off the table.

COS has said Suncor's offer is too low and its shareholders would do better if COS remains independent. Suncor argues crude's decline to multi-year lows has made a higher offer out of the question and makes its offer less risky for shareholders than if they remain invested in an independent COS.

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

The Syncrude stake is COS's main asset, whereas Suncor has vast holdings across the oilsands in addition to interests in refining and offshore platforms.


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