Calgary-based Suncor Energy is looking to add to its holdings with a $6.6B deal to take over Canadian Oil Sands Ltd., the largest partner in Syncrude’s mine in northern Alberta.
On Monday, Suncor announced it would be offering up $4.3B of its own shares and would take on the $2.3B in debt accrued, to bring the total price tag for Canadian Oil Sands to about $6.6B.
The offer value is 43 percent above the market value for Canadian Oil Sands (TSX:COS), based on closing prices at the Toronto Stock Exchange on Friday.
Canadian Oil Sands stock shot up nearly 50 percent amid speculation that a rival offer may emerge while Suncor shares dipped slightly in early trading.
So far, the offer hasn’t been accepted by the Canadian Oil Sands board.
Steven Williams, Suncor’s President and Chief Executive Officer, said the deal offers a lot to all of the parties involved. "We remain convinced there are significant benefits to a transaction for all interested parties. However, given the deterioration of market conditions and the more pessimistic prevailing view on an oil price recovery, we believe the value of COS has declined since the previous offer was made."
If shareholders approve the deal, Suncor will enjoy a huge boost in production share, from 12 percent to 49 percent.
Canadian Oil Sands shares have taken a big dip through the year, falling from $20 to $6.19 last week.
This isn't the first time Suncor has made an offer to buy the company. Back in early April, Suncor offered $12.59 per share but that offer was rejected.
This new offer will give shareholders $8.84 per share.
Suncor said its offer will be open until December 4, although it could be withdrawn or the deadline could be extended.
(With files from The Canadian Press)
