From the Globe and Mail
The CEO of Suncor Energy is throwing cold water on speculation that its hostile takeover offer for Canadian Oil Sands will be sweetened.
Steve Williams says the $4.3-billion bid is good enough, describing it as full and fair.
Williams says given the gloomy outlook for crude prices and lacklustre performance at the Syncrude oilsands mine, COS shareholders should find the offer compelling.
COS and Suncor are both partners in Syncrude – COS with a 37 per cent interest and Suncor holding 12 per cent.
But Suncor says if it’s able to increase its ownership share to just under half, it can do more to help the project run smoothly.
The board and management of COS have rebuffed Suncor’s advances, calling the bid exploitative, opportunistic and not in the best interest of shareholders.
Williams said COS shareholders should make their own decisions.
“Our view is that since we made the offer, crude prices have come down and most of the commentators now believe it’s lower for longer,” he said Thursday after discussing Suncor’s third-quarter results, which included a steep drop in operating earnings.
“We have looked at all historical periods and almost any of them will show you that Suncor is as exposed to a crude upside as Canadian Oil Sands (TSX:COS) is. Our belief is that this is a full and fair offer and should be compelling to Canadian Oil Sands shareholders.”
COS reports its third-quarter results later Thursday.
Imperial Oil Ltd., controlled by U.S. heavyweight ExxonMobil Corp., has a 25 per cent share of Syncrude and manages its day-to-day operations.
Williams said the goal of the COS bid is not to take control of operations from Imperial, but rather to marshal more of its resources to lend support.
Syncrude has been dogged by operational woes over the years. Most recently, a fire in late August damaged pipes, power and communication lines, leading to reduced output during the third quarter.