Suncor Energy Inc. and Canadian Oil Sands Limited have made a deal that will see Suncor purchase all outstanding shares of COS for $6.6 billion, a steep increase in price from Suncor’s original $4.5 billion takeover offer.
The two sides announced the deal in the wee hours Monday morning.
The amended offer will see $2.4 billion of the total purchase price used to cover COS’ estimated debt.
Each COS shareholder will receive 0.28 of a Suncor share for each COS share, up from the previously pledged 0.25 per share.
“We are pleased to have the support of the COS Board of Directors and shareholders, including Seymour Schulich, and have been advised of their intent to tender their shares,” said Steve Williams, Suncor’s president and chief executive officer in a press release. “We believe this transaction delivers excellent value to COS shareholders while maintaining Suncor’s commitment to capital discipline, providing both companies’ shareholders with near and long-term value. Together, we’re bringing this full, fair and final offer to COS shareholders and we encourage everyone to tender their shares.”
The COS Board was advised Sunday by its financial advisor RBC Capital Markets that the new offer was considered fair from a financial point of view.
“Since Suncor made its initial offer, our Board has remained steadfast in our commitment to maximize value for all shareholders. This agreement fulfills that commitment, providing our shareholders with a higher exchange ratio for their shares despite a 37 percent decline in spot oil prices,” said Don Lowry, Chairman of Canadian Oil Sands. “Our shareholders clearly signaled they expected more for their COS shares, and the Board has worked to secure that under very challenging circumstances. Given the current market for energy equities, we recommend shareholders tender their shares to Suncor’s improved offer.”
The Amended Offer sees the minimum amount of tendered shares for the deal to be approved dropped from 66.6 per cent to 51 per cent.
The new deal has the support of the Boards of Directors of both companies.
COS shareholders now have until 4 p.m. on Feb. 5, to tender their shares.
If the deal is approved by shareholders Suncor will hold a 48.74 per cent stake in Syncrude and become the largest partner in the project.
