- Offer to buy Syncrude's biggest owner expires Jan. 8
- Canadian Oil Sands reiterates recommendation not to sell
Suncor Energy Inc. said it will extend its offer for Canadian Oil Sands Ltd. to Jan. 8 following a ruling by the Alberta Securities Regulator requiring shareholders of the target get more time to weigh the bid.
"Our offer is full and fair and in the best interests of COS shareholders," said Steve Williams, Suncor’s chief executive officer. "This process has always been about allowing COS shareholders to decide for themselves on the merits of our offer.”
The move comes after the Alberta Securities Regulator ruled on Monday that Canadian Oil Sands shareholders should have until Jan. 4 to decide whether to sell their shares. Suncor had asked the regulator to strike down Canadian Oil Sands’ shareholder rights plan that lengthened the bidding time and instead limit the window to 60 days, which would make its bid expire Dec. 4.
Canada’s largest oil producer by market value is seeking to increase its 12 percent stake in the Syncrude bitumen mine, whose largest owner is Canadian Oil Sands. Canadian Oil Sands board Chairman Donald Lowry said Monday Suncor’s offer of 0.25 share for each Canadian Oil Sands share doesn’t adequately value the oil-sands miner, and that the company will review alternatives, including continuing as an independent company or looking at rival offers.
Following Suncor’s extension, Canadian Oil Sands reiterated a recommendation that its shareholders do not sell their shares to Suncor, who’s bid “undervalues” the largest owner of Syncrude, the company said in a statement.
Canadian Oil Sands shares closed 0.6 percent lower at C$8.50 in Toronto on Thursday. Suncor was little changed at C$36.75. Canadian Oil Sands shares are trading below the implied price of Suncor’s offer, suggesting investors aren’t confident the deal will go through.
Suncor has emphasized the weakening price for crude while maintaining that its offer is “full and fair.” West Texas Intermediate for January delivery rose $1.14, or 2.9 percent, to settle at $41.08 a barrel on the New York Mercantile Exchange. It dropped 4.6 percent to $39.94 on Wednesday, the lowest close since Aug. 26.
With oil prices near a six-year low, OPEC looked on track to maintain the status quo after member states clashed over oil production policy at an unusual informal gathering before the group’s official meeting in Vienna on Friday. A year ago, Saudi Arabia spearheaded a decision to maintain output and fight for market share rather than cut production to sustain high oil prices.
The lower prices have curbed oil-sands expansion and erased about 1 million barrels of future production, according to industry estimates.
Canadian Oil Sands says it’s able to withstand the rout. The producer cut its dividend 86 percent this year, the most since 1998, and its shares have plunged 65 percent since oil started declining from its peak last June. That compares with a 20 percent decline for Suncor.