Canadian Oil Sands Cites Potential Suitors in Effort to Fend Off Suncor
November 26 2015 - 5:20AM
Dow Jones News
CALGARY, Alberta—More than two dozen potential suitors have
expressed interest in making an offer for Canadian Oil Sands Ltd.,
including four "highly credible parties," according to documents
the company filed in an effort to thwart Suncor Energy Inc.'s
hostile bid.
The interest by other parties may slow Suncor's momentum ahead
of a Dec. 4 deadline it has set for a response to its all-stock
bid—currently worth about 4.47 billion Canadian dollars ($3.36
billion)—for Canadian Oil Sands, the largest owner of the Syncrude
oil-sands mining consortium.
Canadian Oil Sands last month rejected Suncor's bid as too low
and asked securities authorities in its home province of Alberta to
uphold a "poison pill" provision enacted after Suncor made its bid
that gives shareholders at least 120 days to consider a takeover
offer.
Suncor has cited a lack of competing offers as one reason why
Canadian Oil Sands shareholders should accept its bid, which is
0.25 of a share for each Canadian Oil Sands share. The Alberta
Securities Commission has scheduled two days of hearings starting
Thursday to consider Canadian Oil Sands' effort to block that bid
by ruling on its updated shareholder-rights plan.
As of Nov. 19, "four highly credible parties have executed
confidentiality agreements" with Canadian Oil Sands for access to
nonpublic information in preparation for possible bids, RBC Capital
Markets Deputy Chairman R. Jamie Anderson said in an affidavit
filed in support of Canadian Oil Sands. Mr. Anderson said they were
among "more than 25 parties" who have expressed interest. The
potential suitors weren't identified.
RBC and the Alberta Securities Commission declined to comment on
the case.
If a competing bid emerges, it could undermine Suncor's
contention that its offer fully values its target.
"Our offer reflects the full and fair value of all of Canadian
Oil Sands' assets and liabilities," Chief Executive Steve Williams
said on a conference call in late October.
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, effectively banning foreign
state-owned enterprises from acquiring majority stakes in new or
additional oil-sands leases.
The Alberta Securities Commission is expected to issue its
decision on Canadian Oil Sands' shareholder-rights plan before
Suncor's Dec. 4 deadline. If it rules in favor of Canadian Oil
Sands, then shareholders would have until early April to make a
decision if the Suncor bid isn't withdrawn before then.
Some 76 Canadian Oil Sands shareholders have submitted letters
to the commission in support of the company's board and management
and against the Suncor bid, according to a person familiar with the
matter.
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.
Write to Chester Dawson at chester.dawson@wsj.com
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(END) Dow Jones Newswires
November 26, 2015 05:05 ET (10:05 GMT)
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