Suncor Energy has made an unsolicited offer to acquire all of the outstanding shares of Canadian Oil Sands (COS) for about C$4.3bn ($3.2bn).
The total deal value is expected to rise up to $6.6bn ($5bn), as Suncor Energy has offered to assume $2.3bn of Canadian Oil Sands’ estimated outstanding net debt as of 30 June 2015.
As per the offer, Each COS shareholder is expected to get consideration of 0.25 of a Suncor share per COS share.
Suncor Energy president and CEO Steve Williams said: “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.
“We’re offering a significant premium to COS’ current market price and also providing exposure to a meaningful dividend increase. We’re confident in the value this Offer provides to COS shareholders.”
The latest offer, which is subject to certain customary conditions, represents a significant premium of 43% based on the closing prices of the COS shares and the Suncor shares.
It would also result in an investment in an integrated energy company with significant liquidity and access to capital.
Suncor said it has structured the offer to meet the requirements of a ‘Permitted Bid’ under the existing shareholder rights plan of COS.
Including COS’ estimated outstanding net debt of C$2.3bn ($1.7bn) as at 30 June 2015, the total transaction value is about C$6.6bn ($5.03bn).
Responding to the Suncor offer, COS said that it would communicate a recommendation to shareholders soon, after reviewing the offer and related take-over bid circular.
COS holds a 36.74% interest in the Syncrude project, which produces light, sweet synthetic oil from Canada’s oil sands.