#Canada #Calgary #Strathcona Resources #acquisition offer #MEG Energy

Strathcona Resources Ltd. Announces Amended and Extended Offer to Acquire MEG Energy Corp.

Strathcona Resources Ltd. has made headlines by announcing revisions and an extension of its previously stated takeover bid for MEG Energy Corp. The updated offer proposes that Strathcona will acquire all outstanding common shares of MEG, which are not yet owned by Strathcona or its affiliates, for 0.80 shares of Strathcona for each MEG share. The new expiry date for this amended offer is set for 5:00 PM Mountain Time on October 20, 2025.

The amended offer equates to a value of $30.86 per MEG share, providing an 11% premium compared to an agreement between MEG and Cenovus Energy Inc., which was announced on August 22, 2025. This agreement currently values MEG shares at $27.79, making Strathcona's revised proposal competitive. This marks a 10% increase from Strathcona's original offer, previously estimated at $28.02 per MEG share as of early September 2025.

Moreover, Strathcona plans a special distribution of approximately $2.142 billion, which translates to about $5.22 per Strathcona share, as a dividend or a return of capital. This will be contingent upon the success of the amended offer. In the scenario where the offer is unsuccessful, the planned distribution would equate to roughly $10.00 per existing Strathcona shareholder.

Upon successful completion, Strathcona anticipates having around 410 million shares outstanding, alongside a projected net debt of $3.0 billion, resulting in a Net Debt/EBITDA ratio of approximately 1.1x based on a WTI price of $60. The ownership structure post-acquisition is expected to see Waterous Energy Fund (WEF) and insiders controlling about 48% of the company, while 43% would remain with MEG's existing shareholders.

Interestingly, WEF has indicated a longer-term commitment to Strathcona and has no plans to liquidate their shares in response to the new offer. Additionally, they are open to entering a lock-up agreement with the MEG board to support a combined transaction.

In contrast, Strathcona contends that the MEG Board Deal is detrimental to MEG shareholders. They argue that the cash-focused arrangement limits MEG's shareholders' potential gains, reducing their future value share to merely 4% of their ongoing ownership in Cenovus. This is especially notable given market reactions that have seen Cenovus's shares increase significantly following the announcement—indicating a potential 10% rise equating to a significant increase in market value.

Concerns have been raised regarding the process leading to the MEG Board Deal, which lacked competitive bidding and resulted in unfavorable terms for MEG shareholders. Strathcona has publicly criticized the MEG Board's decisions, claiming a lack of genuine engagement and obstruction of structured alternatives by MEG's financial advisors. They assert that without competitive offers, the MEG Board Deal appears disproportionately favorable to Cenovus.

Strathcona is determined to actively participate in the upcoming vote against the MEG Board Deal at the scheduled October 9, 2025, special shareholders meeting. This vote requires a two-thirds majority approval from MEG shareholders present either in person or by proxy.

In summary, Strathcona’s revised offer includes several compelling advantages:

• - An 11% premium to the current MEG Board Deal valuation.
• - Full future upside potential for MEG shareholders, maintaining a substantial 43% ownership stake versus just 4% gained under the current MEG Board Deal.
• - Significant financial accretion for both Strathcona and MEG shareholders on key metrics, coupled with strong strategic and operational benefits post-acquisition, which includes an anticipated increase in liquidity and accessibility to major Canadian equity indexes.

Strathcona emphasizes its unique position as a leading player in North America's oil sector and seeks to capitalize on synergistic opportunities while providing value to all shareholders involved. They believe that consolidating operations will enhance profitability and long-term growth prospects.

For more updates, shareholders and interested parties are encouraged to review the detailed offer presentation available on Strathcona’s official website. Questions regarding the offer can be directed to their appointed Information Agent or their internal contacts as provided.

Strathcona continues to assert its growth strategy focusing on thermal oil and enhanced recovery projects, striving for consolidation within the North American energy space to foster robust operational capabilities.