Calgary-based Husky Energy announced on 5 November that it remains committed to acquiring MEG Energy following the rejection of its initial offer in October
MEG rejected Husky’s CA$6.4bn takeover offer, including $3.1bn of assumed debt, on the grounds that the offer undervalued the company’s shares and was not in MEG’s best interests, according to the Financial Post.
In its statement, Husky highlighted MEG’s Q3 results as being indicative of significant risk to shareholders, reaffirming the company’s belief that MEG’s value to shareholders would be maximized through the proposed purchase.
“MEG’s results reinforce our view that it has a quality asset base and a dedicated operating team, but it remains constrained by a highly levered balance sheet and lack of integration,” said Rob Peabody, CEO of Husky Energy.
“MEG continues to deliver negative free cash flow, and its assertions it can reverse this trend in the future rely on continued high oil prices and narrow heavy oil differentials.”
The firm’s statement also made special mention of the quality of its offer of $11 per MEG share, suggesting that it offers a premium valuation against MEG’s share price performance in recent years.
Husky said its offer represents a premium of 66% on MEG’s closing price over the past three years, and 71% over the previous two, with a valuation that exceeds MEG’s closing price for 96% of trading days over the last three years.