Husky Energy has made an unsolicited offer to acquire MEG Energy in a deal worth C$6.4bn ($5bn) including the assumption of about of C$3.1bn ($2.4bn) of debt.


MEG uses cogeneration technology to provide both steam and electricity, helping to reduce greenhouse gas emissions and offset energy costs. Photo courtesy of MEG Energy Corp.

Under the proposed offer, each MEG shareholder will have the option to choose to receive $11 in cash per MEG share or 0.485 of a Husky share.

The combined entity will have a total upstream production of over 410,000 barrels of oil equivalent per day (boe/day).  In downstream space, it will possess a refining and upgrading capacity of nearly 400,000 barrels per day (bbls/day).

Husky Energy CEO Rob Peabody said: “Husky is confident the proposed transaction is in the best interests of Husky and MEG shareholders, employees and stakeholders.

“However, to date, the MEG Board of Directors has refused to engage in a discussion on the merits of a transaction, giving us no option but to bring this offer directly to MEG shareholders.”

The acquisition is expected to result in creating an innovation major in carbon capture and storage, energy efficiency, enhanced SAGD and diluent reduction technology, according to Husky.

Besides, the combined company will have an improved scope to speed up new projects in Canada in the event of high market uncertainty.

Further, the transaction is expected to lead to a stronger combined technical and operating team, enabling the usage of its expertise across a larger asset base.

Peabody said: “We recognize the significant capabilities of MEG’s talented team.

“We believe MEG and Husky employees will benefit from substantial opportunities for growth and development as part of a stronger, combined Canadian company.”

The acquisition is expected to create long-term synergies that include optimization of the combined capital spending program, deployment of technologies across the combined organization, and future investments to enhance downstream integration, among others.

Acknowledging the takeover announcement made by the Husky Energy, MEG said that its board will consider and evaluate the Husky offer and related take-over bid circular, if and when received.

Subject to receipt of all necessary regulatory approvals, Husky anticipates the proposed transaction to close in the first quarter of 2019.