Husky Is Likely to Win Support to Extend MEG Bid Deadline
(Bloomberg) -- Husky Energy Inc. is expected to win support to extend a deadline to persuade shareholders to back its hostile bid for rival oil-sands producer MEG Energy Corp., despite falling short of winning outright support for the offer, according to people familiar with the matter.
Husky is likely to have won the minimum amount of shareholder support, or more than 50 percent of the company’s outstanding shares, to extend the offer by 10 days, the people said, asking not to be identified because the matter is private. The 10-day extension will allow it to pursue so-called follow-on tenders to gain the necessary support -- two thirds of the outstanding shares -- to take over MEG.
The deadline for the tender offer is 5 p.m. Wednesday in Toronto, and the tallies could still change, the people said.
Representatives for Husky and MEG declined to comment.
MEG shares rose 3 percent to C$8.61 at 2:03 p.m. in trading in Toronto, reversing earlier losses and giving the company a market value of C$2.6 billion ($1.9 billion). Husky advanced 1.2 percent to C$15.69, for a market value of C$15.8 billion. Both companies are based in Calgary.
The shareholder support strengthens Husky’s hand in its attempt to take over MEG in a deal that it has said will create a larger company that’s better equipped to weather the pipeline bottlenecks that have weighed on Canadian oil producers. The combined company would produce more than 410,000 barrels a day and have about the same refining capacity, protecting the enterprise against price shocks for oil-sands crude.
MEG has consistently spurned Husky’s advances, saying that its own plans to expand production at its Christina Lake oil-sands operations will provide more value for shareholders.
MEG also started a strategic review and opened a data room to allow potential rival bidders to assess its value. However, no white knight has emerged from the Canadian oil patch, which has been grappling with a turbulent pricing environment and a provincially mandated production curtailment.
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