From Bloomberg News
Suncor Energy Inc. said shareholders of Canadian Oil Sands Ltd. should disregard their board of directors and accept its hostile $4.7-billion takeover offer.
Canadian Oil Sands has a record of “underperformance, financial challenges,” and vulnerability to low oil prices, Suncor said in a letter to shareholders Thursday. Suncor’s offer represents a 57 per cent premium on Canadian Oil Sands shares, the company said in a statement.
“The COS Board and management are telling COS shareholders to ‘do nothing’ to protect the value of their investment,” Suncor chief executive Steve Williams said in the statement. “This would be saying no to the premium value of our offer, and the opportunity for greater upside and lower risk as a Suncor shareholder.”
Suncor has asked Alberta regulators to strike down the target’s new shareholder rights plan aimed at preventing its takeover. The Alberta Securities Commission will hold a hearing on Nov. 26 to consider the so-called poison pill adopted by the Canadian Oil Sands board last month. The hearing follows Suncor’s application for an order to cease the new rights plan.
“Rejecting our Offer represents real risk to Canadian Oil Sands shareholders,” Williams said Thursday.
Suncor is seeking to bolster its status as Canada’s largest crude producer. Last month, it renewed efforts to take over its partner and biggest shareholder in the Syncrude oil-sands joint venture after two friendly offers were rejected earlier this year. Canadian Oil Sands urged its shareholders to reject the bid and adopted the rights plan in response.
Canadian Oil Sands said on its website that Suncor is paying brokers to help convince shareholders to sell their shares. The oil producer said Suncor is paying a fee of five cents a share to a maximum of $1,500 to brokers.
“Suncor has made a bid that is substantially undervalued, obviously opportunistic, and exploitive,” Canadian Oil Sands said. “Knowing the weakness of their bid, they feel it is necessary to pay brokers and incentivize them to encourage clients to tender their shares.”