(Photo: Syncrude’s Mildred Lake Plant)
The board of Canadian Oil Sands Ltd. says investors should reject a $4.3-billion takeover offer Suncor Energy made two weeks ago.
In a letter to shareholders, Canadian Oil Sands calls the Suncor bid undervalued, opportunistic and exploitative.
The board says Suncor is trying to take advantage of the current state of turmoil in the energy industry, but doesn’t account how COS will benefit when oil prices eventually get off the ground.
Canadian Oil Sands Ltd. is the major shareholder and operator of Syncrude with a 37 per cent stake, while Suncor owns 12 per cent of the project.
“The value offered for your shares is wholly inadequate; it substantially undervalues the COS ownership of Syncrude,” wrote the board in its letter to shareholders this morning. “The bid is exploitative: As an insider to the Syncrude joint venture, Suncor is aware of several cost reduction and value enhancing initiatives being discussed and implemented at Synrude. Suncor’s offer is attempting to increase its ownership before these initiatives take hold and are recognized and valued by the market.”
It goes on to note that COS is in a good position to withstand the current low price environment and recover with even greater value once oil prices finally rebound.
COS is still looking at other options including merging or partnering with another firm along with staying independent.
MyMcMurray has reached out to Suncor for comment.
COS’ letter to shareholders can be read in full here.
(With files from the Canadian Press)
