Husky Energy pulls out from $5bn takeover of MEG Energy

Energy acquisition news : Husky Energy has cancelled its previously announced offer of buying out Canadian oil sands company MEG Energy for C$6.4 billion ($5 billion) owing to multiple reasons including a failure to get enough shareholder support.

The offer to acquire the Canadian oil sands company was made in September 2018, which expired this week. The minimum tender condition for the deal was also not met.

Husky Energy decided not to seek an extension of its proposal, which it said did not get the backing from the board of MEG Energy. It can be recalled that a month or so after it made the offer, MEG Energy’s board turned down the offer on grounds that the Husky Energy offer had considerably undervalued its business and assets.

Derek Evans – MEG Energy President and CEO said: “MEG Shareholders’ rejection of the Husky offer confirms that the bid did not fully recognize the quality and long-term potential of MEG.

“During this process we had the opportunity to meaningfully engage with a significant number of our shareholders. We appreciate their ongoing support and feedback on the strengths of, and opportunities for the company.”

Husky Energy witdhraws its $5bn offer to acquire MEG Energy. Photo courtesy of MEG Energy Corp.

Husky Energy has cited various other negative developments in the business and economic environment that came about following its proposal.

The Canadian energy company has blamed the Alberta government for introducing restrictions on the oil production by private firms. It has also cited delay in the developments of oil export pipelines in Canada as one of the reasons for scrapping the MEG Energy takeover.

Rob Peabody – CEO of Husky Energy said: “Given the outcome of the tender process, Husky will continue to focus on capital discipline and the delivery of the five-year plan we set out at our Investor Day in May 2018.

“We are investing in reliable, higher margin production growth that continues to lower the oil price we need to break even. Both our Integrated Corridor and high-netback Offshore businesses receive global pricing and provide insulation from ongoing commodity price volatility.”

The Canadian energy company will return the MEG shares to their respective shareholders which were earlier tendered to its offer.

In another development, Husky Energy said that it plans to take up a strategic review and also could look to sell its retail and commercial fuels business in Canada. The company is also planning to divest the Prince George Refinery, a light oil refinery in British Columbia as it considers it to be non-core for its business.