CALGARY — Strathcona Resources Ltd. is making a takeover stock-and-cash offer for oilsands producer MEG Energy Corp. that values the company at about $5.9 billion.
The offer comes after Strathcona, which already owns about a 9.2 per cent stake in MEG, says it sent a takeover offer to the MEG board of directors in April, but was rejected earlier this week.
"Strathcona respects the MEG board's right to dismiss any offer made for MEG, and it has no reason to believe that its decision to dismiss Strathcona's proposal was not made in good faith," the company said in a news release.
"However, Strathcona believes the benefits of a combination of Strathcona and MEG are significant enough that MEG Shareholders should have the opportunity to decide for themselves."
MEG said Friday that its board of directors will consider and evaluate the Strathcona offer once it has been received and urged shareholders to take no action until it has made a recommendation.
Strathcona is offering 0.62 of a Strathcona share and $4.10 in cash per MEG share in the proposal worth $23.27 per MEG share based on the closing price of its shares on Thursday.
MEG shares closed at $21.30 on the Toronto Stock Exchange on Thursday.
Strathcona said it is ready to engage with the MEG board and would also support a strategic alternatives process to determine if a superior transaction is available.
"Strathcona would be willing to participate constructively and in good faith in such a process, including signing a mutual confidentiality agreement to share non-public information, provided it is not required to sign a standstill agreement," the company said.
Strathcona said a combination with MEG would create Canada's fifth largest oil producer and fourth largest steam-assisted gravity drainage producer, with among the largest proved oil reserves in North America.
It said it has identified $175 million in annual synergy opportunities, including $50 million in overhead reduction costs, if the deal goes ahead.
On Wednesday, Strathcona announced a series of three agreements to sell its assets in the Montney region valued at a total of $2.84 billion in a move that will make it a pure-play heavy oil company.
It also said it has bought the Hardisty crude-by-rail rail terminal in Alberta for about $45 million.
This report by The Canadian Press was first published May 16, 2025.
Companies in this story: (TSX:SCR, TSX:MEG)
The Canadian Press
