Cenovus Boosts MEG Energy Stake to 8.5% Ahead of Vote
Move signals confidence in its $8.6B acquisition bid as a postponed shareholder meeting looms.
Cenovus Energy (CVE) has decisively increased its ownership in MEG Energy, acquiring a substantial 8.5% stake in a strategic move to bolster support for its proposed takeover. The action comes just ahead of a postponed shareholder meeting scheduled for October 22, where investors will vote on the combination.
This share accumulation underscores Cenovus's strong commitment to what it has termed its '' to acquire MEG. Cenovus has stated it will vote these newly acquired shares in favor of the transaction, signaling a clear intent to see the deal through.
The increased stake follows Cenovus's revised offer for MEG, which values the company at approximately $8.6 billion. The amended agreement provides MEG shareholders with the option to receive either cash or Cenovus shares, a structure adjusted after feedback from investors who sought greater participation in the combined entity's future growth. This strategic maneuver effectively counters a rival all-stock bid from Strathcona Resources Ltd., with MEG's board urging its shareholders to support the Cenovus offer.
The acquisition is seen by many as a significant strategic play in the Canadian oil sands. , with some calling the proposed transaction a 'strategic masterstroke.' The deal is expected to be accretive to both cash flow and free cash flow per share by 2026. Cenovus anticipates generating significant in the initial years, ramping up to $400 million annually.
By combining operations, Cenovus aims to consolidate its position as a leading oil sands producer, leveraging MEG's high-quality steam-assisted gravity drainage (SAGD) assets. The integration would create a dominant player with enhanced operational scale and efficiency. All eyes are now on the upcoming shareholder vote, which will be a pivotal moment for the Canadian energy sector and will determine the success of Cenovus's determined acquisition strategy.