Suncor secures Canadian Oil Sands deal

After failing to garner the support of two-thirds of Canadian Oil Sands’ shareholders last week, Suncor Energy (TSE:SU, Mkt cap 42.53B, P/E 447.72, Div/yield 0.29/3.94, EPS 0.07, Shares 1.45B) has acted quickly to agree terms on a $4.2-billion deal plus debt for COS, The Globe and Mail reports.

The turnaround comes only a week after Suncor extended its hostile bid for Canadian Oil Sands, with analysts casting doubt over whether Suncor was likely to sweeten its bid in order to reach a positive conclusion.

Suncor Energy COS

Suncor Energy has agreed terms on a $4.2-billion deal plus debt for COS

However, it has done just that, with Canadian Oil Sands shareholders now being offered 0.28 of a Suncor share – about 12% more than before.

That puts the total price of the deal at around $6.6 billion, but includes $2.4 billion in debt that Suncor will assume – making the stock portion worth about $4.2 billion.

As The Globe and Mail notes, because the offer is largely an exchange of shares, its monetary value will fluctuate depending on Suncor’s stock price. As of close of play Friday, the new offer was worth $8.74 per COS share, up from $7.81 under the initial offer.

In a joint media release, the two Calgary-based firms confirmed that both sets of directors – as well as major Canadian Oil Sands investor Seymour Schulich – are fully in support of the revised offer.

Schulich, who was fervently opposed to the original Suncor offer, said in a statement that he had urged the other COS shareholders to join him in accepting the new offer.

Don Lowry, chairman of Canadian Oil Sands, added: “Since Suncor made its initial offer, our board has remained steadfast in our commitment to maximize value for all shareholders. This agreement fulfils that commitment, providing our shareholders with a higher exchange ratio for their shares despite a 37% decline in spot oil prices.”

Suncor Energy Inc. in a Calgary, Alberta based integrated energy company. The Company is focused on developing Canada’s petroleum resource basin, Athabasca oil sands. The Company operates in three business segments: Oil Sands, Exploration and Production, and Refining and Marketing. The Company’s Oil Sands segment includes Oil Sands operations and Oil Sands ventures operations. Its Exploration and Production segment consists of offshore operations off the east coast of Canada and in the North Sea, and onshore assets in North America, Libya and Syria. The Company’s Refining and Marketing segment is engaged in Refining and Supply, and Downstream Marketing. In addition, the Company explores, for, acquires, develops, produces and markets crude oil and natural gas in Canada and internationally. The Company also transports and refines crude oil, and markets petroleum and petrochemical products primarily in Canada. More from Reuters »

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