Suncor Energy hostile bid for Canadian Oil Sands to be ruled on by Alberta regulator
Canadian Oil Sands wanted until February to consider $4.5B all-stock takeover
The Alberta Securities Commission will decide Monday whether Canadian Oil Sands Ltd. will be allowed to stall a hostile takeover offer by oilsands behemoth Suncor Energy.
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COS put in place a new shareholder rights plan, also known as a poison pill defence, shortly after Suncor took its all-stock bid directly to investors on Oct. 5.
That tactic is meant to buy COS time to find an alternative to the offer, which is worth about $4.4 billion based on Suncor's most recent closing share price.
The tone of the debate between both companies has been outright nasty at times.
COS has said the Suncor offer is too low, opportunistic and exploitive and that the would-be buyer has resorted to "fearmongering" in its quest to snap up a bigger slice of the oilsands at a bargain price. CEO Ryan Kubik has accused Suncor of trying to "ram" its offer through by seeking to overturn the poison pill.
Suncor, meanwhile, has argued that given the likelihood of a prolonged downturn in oil prices, the status quo is risky for COS shareholders and that "hope is not a strategy."
COS shareholders should be able to decide for themselves whether to accept the offer, it says.
Any takeover permitted under the COS shareholder rights plan must be open for 120 days, or until early February. By the time the Suncor offer expires on Friday, it will have been open for half that time.
A COS financial adviser said in an affidavit filed to the ASC last week that more time is needed because 25 other potential bidders are kicking the tires. Of those, four had signed non-disclosure agreements in order to access more detailed information about COS.
The case is being closely watched in corporate Canada in light of rule changes proposed by provincial and territorial securities regulators. Among other things, they're suggesting bids be open for a minimum of 120 days.
Anita Anand with the C.D. Howe Institute has called that element "ill-conceived" because it could discourage takeover bids in future.
At the centre of the Suncor-COS battle is the massive Syncrude oilsands mine north of Fort McMurray, Alta.
Both companies are partners in Syncrude — COS with 37 per cent and Suncor with 12 per cent. That means if Suncor is successful, it would own just under half of the mine and would be able to marshal more of its own resources to improve operations.
Other than their interests in the project, the two companies have little else in common.
The Syncrude interest is COS' only asset and the company does not have a hand in the day-to-day operations of the mine. At the end of last year, its workforce consisted of 23 full-time employees, four part-timers and three contractors.
Suncor, on the other hand, is the dominant oilsands player, with production of 430,300 barrels a day, not including its Syncrude interest. It also has four refineries, a chain of Petro-Canada gas stations and offshore operations in the North Sea and off Canada's East Coast. At the end of 2014, it had close to 14,000 employees, though it has cut at least 1,200 jobs this year.