Canadian Oil Sands urges rejection of Suncor's hostile takeover
Merged company would own almost half of Syncrude oilsands development
The board of Canadian Oil Sands has urged shareholders to reject Suncor's $4.5-billion hostile bid for the company, on the grounds that it substantially undervalues the oilsands company.
Last month, Suncor went public with its offer after receiving a frosty reception from COS management for its bid to take over the company whose main asset is a stake in the Syncrude operation in northern Alberta. At current share prices, that would value COS at about $4.5 billion.
A year ago, the company was worth more than twice that, but that was before oil prices dropped from above $100 to under $50 a barrel.
Suncor has offered to buy COS in exchange for one-quarter of a Suncor share for every COS share. The target company says that "substantially undervalues" what COS is worth, and calls the bid "exploitive."
The COS board laid out 15 reasons for shareholders to reject the deal, but ultimately they all boil down to their belief that Suncor simply isn't offering enough.
Suncor also owns a stake in Syncrude. If the two companies merge, Suncor would control 49 per cent of the massive oilsands development.
COS alleges that Suncor is trying to take advantage of temporarily cheap oil prices to buy a valuable asset on the cheap, and get Syncrude's estimated 46 years' worth of production "without paying a fair price."
More to come