Cenovus to acquire MEG Energy in $5.7B oil sands deal

Cenovus Energy (TSX, NYSE: CVE) has entered into a definitive agreement to acquire MEG Energy (TSX: MEG) in a cash-and-stock deal valued at C$7.9 billion ($5.7 billion).

The acquisition brings together two top Alberta oil sands producers with combined production of over 720,000 barrels per day and the largest land base in the best quality resource area in the basin, Cenovus said in a news release.

The deal, announced August 22, ended weeks of speculation that Calgary-based Cenovus would emerge as a white knight for MEG, which was facing a hostile takeover attempt.

Under the terms, Cenovus will acquire all of the issued and outstanding common shares of MEG for C$27.25 per share, which will be paid 75% in cash and 25% in Cenovus common shares.

The acquisition consolidates the contiguous assets at Christina Lake, enabling integrated development of the region and unlocking significantly accelerated access to previously stranded resource, Cenovus said.

“This transaction represents a unique opportunity to acquire approximately 110,000 barrels per day of production within some of the highest quality, longest life oil sands resource in the basin, which sits directly adjacent to our core Christina Lake asset,” Cenovus CEO Jon McKenzie said in a news release. 

Cenovus said it expects to realize approximately C$150 million of near-term annual synergies, growing to over C$400 million per year in 2028 and beyond.