Canadian oil firm MEG says Husky balked at friendly takeover talks
(Adds details about MEG, Husky)
By Rod Nickel
WINNIPEG, Manitoba, Jan 18 (Reuters) - Canadian oil producer
MEG Energy Corp's CEO invited his Husky Energy Inc
counterpart this month to negotiate a friendly takeover
of MEG, but Husky did not follow up, MEG's vice president of
investor relations John Rogers said on Friday.
Husky abandoned its hostile bid for MEG on Thursday, saying
it could not win sufficient MEG shareholder support after
Alberta's government ordered production cuts to reduce a crude
MEG's chief executive officer, Derek Evans, phoned Husky CEO
Rob Peabody in early January and invited him to visit and
discuss a possible friendly deal to sell MEG, Rogers said.
"We approached them and said, 'You know with a little bit of
negotiation, I'm sure we can find a way out of this,'" Rogers
said, recalling MEG's invitation. "They never got back to us."
Husky spokesman Mel Duvall said its offer expired without
the minimum tender condition being met.
MEG produced an estimated 88,000 barrels of oil per day in
2018, according to GMP First Energy, equal to about 40 percent
of Husky's production. The company, whose investors include
Chinese state-owned oil producer CNOOC Ltd, is the
largest pure-play Canadian heavy oil producer.
Publicly, Husky, whose majority investor is Hong Kong tycoon
Li Ka-shing, continued to urge MEG shareholders to tender to its
offer leading up to its expiry this past Wednesday.
Husky was expected to secure over 50 percent support from
MEG shareholders, sources told Reuters and other media outlets
on Wednesday. It was expected to consider extending its offer to
win the required two-thirds.
But Husky allowed the offer to expire, citing Alberta's
curtailment orders and a lack of progress expanding pipelines as
recent negative developments. It has not said publicly how much
support it received.
The company's decision to abandon its bid "may dent its
credibility," RBC analyst Greg Pardy said in a note.
MEG had invited Husky in November to sign a confidentiality
agreement and enter its data room, Rogers said. Husky did not
take MEG up on it, although several other companies did, he
No rival bids were made.
MEG's spurned invitations suggest that Husky's commitment to
the deal may have wavered after conditions in Canada's oil patch
deteriorated. Discounts on Canadian oil hit record-high levels
in October, leading the Alberta government to order the
curtailments, which Husky has criticized.
Rogers said he did not believe MEG was in play any longer,
despite a 36 percent selloff of its stock on Thursday that could
make the heavy oil producer a bargain buy.
(Reporting by Rod Nickel in Winnipeg, Manitoba; Editing by Phil
Berlowitz, Susan Thomas and Leslie Adler)
First Published: 2019-01-18 18:26:41
Updated 2019-01-18 21:50:18
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