TORONTO: Suncor Energy Inc launched a hostile bid for Canadian Oil Sands Ltd as the slump in oil prices encourages consolidation in Canada’s oil sands industry, which has one of the world’s highest operating costs and lowest prices.
Canadian Oil Sands and Suncor are among stakeholders in Canada’s largest synthetic crude project, Syncrude, in northern Alberta.
Alberta’s oil sands are the world’s third-largest crude reserves after Saudi Arabia and Venezuela and a leading source of U.S. crude imports.
Canadian Oil Sands holds about 37 percent stake in Syncrude, while Suncor owns about 12 percent.
Suncor on Monday made an all-stock offer for Canadian Oil Sands valued at about C$4.3 billion ($3.29 billion).
Canadian Oil Sands shareholders will receive 0.25 of Suncor shares for each share held, the company said.
The offer works out to C$8.84 per share based on Suncor’s Friday close and represents a premium of about 43 percent to Canadian Oil Sands’ last close on the Toronto Stock Exchange.
The deal is valued at about C$6.6 billion including Canadian Oil Sands’ debt of C$2.3 billion as of June 30.
Suncor has been scouting for assets and in September bought a tenth of the Fort Hills oil sands project in northern Alberta from French oil company Total.
The tender offer for Canadian Oil Sands will be open until Dec. 4 unless extended or withdrawn, Suncor said.
Suncor’s financial adviser is JP Morgan Securities LLC while Blake, Cassels & Graydon LLP and Sullivan & Cromwell LLP are its legal advisers.
Canadian Oil Sands was not immediately available to comment on the offer.
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