Husky Energy Inc. abandoned its C$2.75 billion hostile takeover bid for rival Canadian oilsands producers MEG Energy Corp. after failing to win enough support from shareholders.
The offer didn’t secure the backing of the required minimum number of investors by the bid’s expiry on Wednesday, Husky said in a statement on Thursday.
The Calgary-based company needed to win support from holders of more than 50 percent of the outstanding shares to extend the offer by 10 days, people familiar with the matter said Wednesday.
MEG shares were indicated to trade at C$4.60 in Canada, implying a plunge of 46 percent compared with its previous close, while Husky was indicated 2.1 percent higher.
Husky cited "negative surprises" since it commenced its bid in October, including the government of Alberta’s mandated production cuts, which were implemented in order lift oil prices in the province, and a continued lack of progress on the development of new export pipeline capacity. Husky said it will proceed with the potential divestment of its retail business and Prince George refinery.
Husky argued that the deal would have created a larger company that’s better equipped to weather the pipeline bottlenecks that have weighed on Canadian oil producers. The combined company would have produced more than 410,000 barrels a day and had about the same refining capacity, protecting the enterprise against price shocks for oil-sands crude.
MEG consistently spurned Husky’s advances, saying that its own plans to expand production at its Christina Lake oil-sands operations will provide more value for shareholders. It also started a strategic review and opened a data room to allow potential rival bidders to assess its value.
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