MEG Energy Corp.’s shareholder vote concerning the proposed acquisition by Cenovus Energy Inc. has been postponed for another week. James McFarland, the chair of the MEG board, halted a meeting twice on Thursday to address a sudden “regulatory inquiry” before rescheduling it for November 6.
This delay marks the latest development in a contentious takeover battle spanning several months, pitting Cenovus, a major player in the oilsands industry, against the smaller competitor Strathcona Resources Ltd. Strathcona recently withdrew its all-stock bid and committed to voting its 14% stake in MEG in favor of an improved offer from Cenovus.
In a strategic move, Cenovus disclosed the sale of its Vawn thermal heavy oil operation in Saskatchewan and certain undeveloped lands in western Saskatchewan and Alberta to Strathcona for $150 million. This transaction includes an initial payment of $75 million in cash, with an additional $75 million contingent on future commodity prices.
McFarland stated, “This meeting is adjourned with Cenovus’ approval to allow MEG to provide further details on the previously announced asset deal between Strathcona Resources Ltd. and Cenovus, along with the MEG board’s related decision-making process.”
The saga began in April when Strathcona presented a cash-and-stock takeover proposal to the MEG board, which was promptly rejected. Following this, Strathcona directly approached MEG shareholders with its offer. Subsequently, MEG’s board criticized the bid as “opportunistic” and initiated a review to seek a more favorable offer.
In August, MEG accepted a friendly takeover bid from Cenovus, prompting Strathcona to modify its offer to an all-stock arrangement in a bid to enhance investor benefits from future growth prospects. Cenovus subsequently increased its bid and offered a higher equity stake in early October, with an agreement allowing Cenovus to purchase up to 9.9% of MEG’s stock before the shareholder vote.
Shortly after, Strathcona withdrew its bid, citing unsatisfactory conditions, while some MEG shareholders expressed concerns about perceived unfair tactics to secure the deal with Cenovus. Both Cenovus and MEG own adjacent oilsands properties at Christina Lake, near Fort McMurray, Alberta, emphasizing the synergies and cost efficiencies achievable through a merger. Strathcona also operates steam-driven facilities in the same area.
If the acquisition proceeds, Cenovus stands to gain an additional 110,000 barrels per day of oilsands production, elevating its total portfolio to 720,000 barrels of oil equivalent per day. Cenovus anticipates that production could expand to 850,000 barrels of oil equivalent per day by 2028.