- Cenovus Energy (CVE) says it has received all necessary regulatory approvals to move ahead with its C$3.8 billion buyout of Husky Energy
- Husky shareholders will receive 0.7845 of a Cenovus share plus 0.0651 of a share purchase warrant in exchange for each Husky share held
- Upon completion of the transaction, Cenovus will own roughly 61 per cent of Husky – creating Canada’s third largest oil and natural gas producer
- The deal is expected to formally close on January 1, after which the combined entity will continue to operate as Cenovus Energy out of its headquarters in Calgary, Alberta
- Cenovus Energy is currently down 2.77 per cent to $7.36 per share
Cenovus Energy (CVE) says it has received all necessary regulatory approvals to move ahead with its C$3.8 billion buyout of Husky Energy.
Under the terms of the deal, Husky shareholders will receive 0.7845 of a Cenovus share plus 0.0651 of a share purchase warrant in exchange for each Husky share held. As such, Cenovus will own approximately 61 per cent of Husky – creating Canada’s third largest oil and natural gas producer.
In the current environment of significantly declined demand and weakened oil prices, the transaction is expected to reduce Cenovus’ historic reliance on the Alberta sector while maintaining a healthy exposure to global commodity prices.
“We will be a leaner, stronger and more integrated company, exceptionally well-suited to weather the current environment and be a strong Canadian energy leader in the years ahead,” said Alex Pourbaix, President and CEO of Cenovus Energy, in late October.
“The diverse portfolio will enable us to deliver stable cashflow through price cycles, while focusing capital on the highest-return assets and opportunities,” he added.
Based on year-to-date figures, Cenovus produces 475,000 barrels of oil per day, while Husky produces 275,000. The resulting company is estimated to produce a total of 750,000 barrels per day, with an upgrading and refining capacity of 660,000 barrels per day – the second largest in Canada.
Alex will remain as CEO of Cenovus while Jeff Hart, the current financial chief of Husky, will act as Chief Financial Officer. The Board of Directors will also be amended to consist of eight members in total – four from Cenovus and four from Husky.
The merger follows a string of other US-based deals as major oil and gas companies look to consolidate their positions in a struggling market. These include ConocoPhillips’ $9.7 billion takeover of Concho Resources and Chevron’s $4.2 billion purchase of Noble Energy.
The transaction is expected to formally close on January 1, after which the combined entity will continue to operate as Cenovus Energy out of its headquarters in Calgary, Alberta.
Cenovus Energy is currently down 2.77 per cent to $7.36 per share at 1:28am EST.
