Strathcona Seeks to Block $5.7 Billion Cenovus Deal to Buy MEG Energy

Previously rejected MEG Energy bidder Strathcona Resources intends to buy an additional 5% stake in MEG and vote these shares and the existing 9.2% stake against the Cenovus acquisition offer for MEG, as the latest major Canadian deal faces hurdles towards completion.

Last week, Cenovus Energy announced it has entered into a definitive arrangement agreement to acquire MEG Energy Corp in a cash and stock deal valued at US$5.7 billion (C$7.9 billion), including assumed debt.

The agreement between Cenovus and MEG came after a months-long saga in which suitors have sought to buy MEG Energy.

Earlier this year, Strathcona Resources made an unsolicited offer to acquire MEG Energy, but MEG’s board rejected the offer and advised shareholders to reject it too and not tender their shares.

MEG’s board said in June that the share consideration in Strathcona’s offer exposes shareholders to a company with inferior assets, and that “MEG is a uniquely attractive investment opportunity that warrants a premium valuation.”

At the time, MEG initiated a strategic review of alternatives with the potential to surface an offer superior to its standalone plan.

Last week, MEG agreed to be acquired by Cenovus in a deal that will consolidate adjacent, fully contiguous, and highly complementary assets at Christina Lake.

The transaction has been unanimously approved by the boards of both companies. Cenovus expects the acquisition to close in the fourth quarter of 2025, subject to regulatory approvals and approval of the transaction by MEG shareholders.

However, the rejected Strathcona is now putting up a fight and said this week that it intends to purchase an additional 5% in MEG, subject to market conditions. Together with the current 9.2% stake in MEG, Strathcona expects to have 14.2% in the target company.

Source: Oilprice