In corporate news, Suncor Energy (TSX:SU) is making a hostile bid to take over Canadian Oil Sands Ltd. (TSX:COS), the largest partner in the massive Syncrude mine.
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Williams said Suncor has not identified any other potential takeover targets but has about $12 billion in cash on its balance sheet, a few of which would be used to pay down COS’s debt.
Steven Williams, Suncor’s President and Chief Executive Officer, said the deal offers a lot to all of the parties involved. Equities research analysts forecast that Canadian Oil Sands will post ($0.84) EPS for the current year.
The proposed deal reflects a trend towards consolidation in the struggling oil patch as the bigger, financially healthier companies eye acquisition opportunities in an environment of continuing low oil prices and concerns over reduced demand from China. “By accepting this offer, COS shareholders will become investors in Canada’s leading integrated energy company with 50 years of experience in oil sands operations and a track record of returning significant value to shareholders”. At last check, benchmark Brent crude was up 3.43% at US$49.78/barrel, while copper surged 1.23% to US$2.354/pound.
Under the terms of the offer, each COS shareholder would receive a consideration of 0.25 of a Suncor share per COS share.
On the Toronto Stock Exchange, Suncor shares fell 77 cents or 2.18 per cent to $34.56, while COS stock jumped by $3.41, or more than 55 per cent, to end trading worth $9.60.
Canadian Oil Sands is expected to reject the offer, according to a person familiar with the Calgary-based company’s thinking who asked not to be identified because the matter is private.
Suncor’s offer for Canadian Oil Sands expires on December 4.
Nakamoto said the Canadian dollar is gaining strength as the prospect of an interest rate hike by the Americans, which would make their dollar more attractive to investors and drive up its value against the loonie, recedes into the future.
Syncrude’s Mildred Lake facility. “I think if anything it makes it more stable”, he said.
“We were down so much it looked like we were going into a recession, but it’s just a slow-growth economy”, he said. “Clearly both Imperial and Suncor understand the asset well through their own ownership of it”.
The two oilsands mining operations near Fort McMurray are neighbours and the oldest producers in the oilsands industry.
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Cnooc Ltd. through its Canadian subsidiary Nexen Energy.
