MEG Energy advises shareholders to reject Strathcona’s $4.42bn takeover bid
Canadian oil producer MEG Energy’s Board of Directors has unanimously recommended that shareholders reject Strathcona Resources’ unsolicited takeover bid.
The bid is estimated at nearly C$6bn ($4.42bn), according to Reuters.
On 30 May 2025, Strathcona made a formal offer to acquire all issued and outstanding MEG shares it does not already own, combining 0.62 of a Strathcona share and $4.10 in cash per MEG share.
The offer is set to remain open until 15 September 2025.
A special committee formed by MEG’s board, with the support of financial and legal advisors, conducted a thorough evaluation of the offer.
Following the review, the board determined that the compensation proposed for shareholders under the offer is insufficient from a financial perspective and does not serve the best interests of the company or its shareholders.
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By GlobalDataThe board has unanimously advised shareholders to reject the offer by not tendering their shares.
In the directors’ circular, the board outlined several reasons for its recommendation. It highlighted that the offer’s share consideration would expose shareholders to a company with inferior assets compared to those of MEG.
MEG’s assets, including the Christina Lake project, are situated in the prime Athabasca oil sands region and boast approximately five billion barrels of discovered bitumen initially-in-place, supporting low-risk growth for decades.
Furthermore, the board contrasted MEG’s extensive and high-quality asset portfolio with Strathcona’s assets, which it described as scattered, lacking scale and situated in less prolific areas.
The board also raised concerns about the potential for downward pressure on the combined company’s share price due to Waterous Energy Fund’s concentrated 51% ownership position, if the deal is finalised.
Additionally, the board criticised the offer for lacking a real premium, stating that the advertised premium was opportunistically calculated based on Strathcona’s relatively thin trading volume.
The board has authorised the company to commence a strategic review of alternatives that may yield an offer superior to the company’s stand-alone strategy.
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