Suncor Energy bid for a hostile takeover of Canadian Oil Sands Ltd. (COS) will be decided on Monday. The Alberta Securities Commission will decide whether COS will be able to stall the takeover.
COS has put in a new shareholder rights plan, often referred to as a ‘poison pill’ defense allowing them time to find an alternative offer. COS feels Suncor’s current offer of $4.4 billion is much too low.
Any takeover disclosed under the new rights plan requires it to be open for 120 days. Suncor’s offer will have been open for half that time by the time their offer expires on Friday. This has resulted in an outright nasty debate at times.
CEO Ryan Kubik has accused Suncor of seeking to overturn the poison pill by “ramming” its offer and that they have resorted to “fear mongering” to try to takeover at a bargain price.
Meanwhile, Suncor argues that COS stakeholders should be able to make their own decisions on whether or not they would like to accept the offer. The company explains that “hope is not a strategy” and that due to the likely downturn in oil prices, COS stakeholders are at risk.
In an affidavit, a financial advisor for COS said that there are 25 other possible bidders. Four of those have signed non-disclosure agreements to access comprehensive information about COS.
Another factor at the center of the arguments has been over the Syncrude oil sands mine, partially owned by both COS and Suncor. Syncrude, located north of Fort McMurray, Alta, is partnered 37% with COS and 12% with Suncor. This means that if Suncor is accomplishes its goal of taking over COS, it will own nearly half of the mine and would be able to improve operations with some of its own resources.
Aside from this, COS and Suncor have little in common. Corporate Canada is watching the case closely in light of the new changes rules by territorial and provincial security regulators.