CALGARY – Cenovus Energy Inc. says its cash-and-stock bid for MEG Energy Corp. offers a premium valuation and certainty over a rival all-stock offer by Strathcona Resources Ltd.
“Cenovus brings scale, industry-leading experience, tier-1 assets, near-term growth, diversified revenues, a stronger balance sheet and clearly defined synergies,” Cenovus said in a presentation laying out its arguments for MEG shareholders to accept the friendly deal.
Last week, Strathcona revised its hostile offer to 0.80 of a share for each MEG share it does not already own. Its initial overture this spring was a combination of cash and stock. When the new bid was announced, it was worth $30.86 per share, up from $28.02.
The Cenovus offer comprises 72 per cent cash and 28 per cent stock. Cenovus said its bid has an implied value of $28.44 and would represent a 39 per cent premium to where MEG’s stock was trading in mid-May. It said the price would represent the highest value ever paid for a pure-play steam-driven oilsands asset.
Cenovus argues the Strathcona deal carries significant downside risk if that company’s shares drop once the deal is complete, calling Strathcona’s current share price “overvalued.”
The MEG board has unanimously recommended shareholders back the Cenovus deal over the Strathcona proposal, which it has said is “fundamentally unattractive.”
Strathcona has called the Cenovus deal “lopsided” and the MEG board’s sale process “broken” for accepting it without meaningfully entertaining the competing Strathcona bid.
Strathcona executive chairman Adam Waterous has noted that Cenovus’ stock jumped 10 per cent in the days following news of its deal with MEG last month, but typically an acquirer’s share price would fall after such an announcement.
He said that equates to a $3.9-billion gain in Cenovus’ stock market value that MEG shareholders are mostly not able to enjoy, as they would only own four per cent of a post-takeover company.
Under the Strathcona deal, MEG shareholders would own 43 per cent of the new entity.
The Cenovus offer must be approved by a two-thirds majority vote by MEG shareholders expected to be held on Oct. 9. Strathcona has said it intends to vote its 14.2 per cent interest in MEG against the deal.
Cenovus and MEG have side-by-side oilsands properties at Christina Lake, south of Fort McMurray, Alta., while Strathcona also has operations in the region.
This report by The Canadian Press was first published Sept. 19, 2025.
Companies in this story: (TSX:MEG, TSX:CVE, TSX:SCR)
