IMO Imperial Oil Limited

CALGARY, Alberta—The chief securities regulator in Alberta on Monday partially upheld a "poison pill" plan adopted by Canadian Oil Sands Ltd., complicating a hostile takeover bid for the company by Suncor Energy Inc., Canada's largest oil producer.

The decision comes ahead of a Dec. 4 deadline Suncor set for a response to its all-stock bid—currently worth about 4.47 billion Canadian dollars ($3.35 billion)—for Canadian Oil Sands, the largest owner of the Syncrude oil-sands mining consortium.

Canadian Oil Sands last month rejected Suncor's Oct. 5 bid as too low and asked securities authorities in its home province of Alberta to uphold provisions enacted after Suncor made its offer that give shareholders at least 120 days to consider a takeover.

After two days of hearings late last week, the Alberta Securities Commission ruled Monday that Canadian Oil Sands shareholders will have until Jan. 4 to render a decision, according to spokesman Mark Dickey.

The decision is short of the early April extension that Canadian Oil Sands had sought, but beyond Suncor's Dec. 4 deadline. It was unclear why the ASC choose that date. "The reasons [for the decision] will come at a later date," the spokesman said.

Canadian Oil Sands said the decision vindicated its position, and reiterated its opposition to the bid as undervalued. "This is a big win for Canadian Oil Sands' shareholders and a major blow to Suncor's credibility," Canadian Oil Sands Chairman Donald Lowry said in a statement.

Suncor said it would withhold comment until it has had more time to assess the ASC's ruling. "We're reviewing the decision to determine our next steps and will advise in due course," said spokeswoman Sneh Seetal.

Suncor last week indicated plans to drop the offer, which is 0.25 of a Suncor share for each Canadian Oil Sands share, if its Dec. 4 deadline wasn't met. In documents filed to the securities regulator in support of its position, Suncor said "there is a very real and distinct possibility" the bid for its smaller rival will not be extended.

Suncor has said it can improve the performance of Canadian Oil Sands assets and that its offer represents a fair premium to shareholders amid a prolonged slump in crude oil prices. But Canadian Oil Sands' board and senior management have urged shareholders to turn down the unsolicited bid, calling it undervalued and opportunistic due to a current slump in crude oil prices.

Canadian Oil Sands filed documents indicating more than two dozen potential suitors have expressed interest in making an offer, including four "highly credible parties." Suncor told Canadian Oil Sands shareholders as recently as the end of October that it wasn't aware of any competing bids that assign a higher valuation to the company's shares.

Suncor seeks to consolidate its position in the Syncrude joint venture by taking over Canadian Oil Sands' 36.7% stake. Suncor currently owns 12% of Syncrude. Exxon Mobil Corp. controls a 25% stake through its Canadian subsidiary Imperial Oil Ltd., which is the primary operator of Syncrude's oil-sands mines in northern Alberta.

As a Canadian company, Suncor doesn't face a review by federal regulators under the Investment Canada Act, which only applies to foreign investors. In 2012, Ottawa tightened restrictions on investment in oil-sands assets, which effectively prohibited foreign state-owned enterprises from gaining control over oil-sands leases in the future.

Canadian Oil Sands is scheduled to release its 2016 capital spending plans for Syncrude on Tuesday.

Write to Chester Dawson at chester.dawson@wsj.com

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(END) Dow Jones Newswires

November 30, 2015 20:15 ET (01:15 GMT)

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