Canadian Oil Sands wins more time for bids as Suncor mulls steps

JEREMY VAN LOON

CALGARY, Alberta (Bloomberg) -- Canadian Oil Sands Ltd.’s shareholders won another month to find suitors willing to counter Suncor Energy Inc.’s C$4.5-billion ($3.37-billion) hostile takeover offer. They may lose Suncor’s bid in the process.

Canadian Oil Sands will have until Jan. 4 to find another bidder, Stephen Murison, vice-chair of the Alberta Securities Commission, said in a decision on Monday in Calgary. Suncor had asked the regulator to strike down Canadian Oil Sands’ shareholder rights plan that lengthened the bidding time and instead limit the window to 60 days, which would make its bid expire Dec. 4.

Suncor, Canada’s largest oil producer by market value, is seeking to increase its 12% stake in the Syncrude bitumen mine, whose largest owner is Canadian Oil Sands. Canadian Oil Sands board Chairman Donald Lowry said Suncor’s offer of 0.25 share for each Canadian Oil Sands share doesn’t adequately value the oil-sands miner, and that the company will review alternatives, including continuing as an independent company or looking at rival offers.

“The Board is continuing to aggressively examine potential alternatives such as superior offers from other parties or continuing as an independent company in order to ensure maximum value for shareholders,” Lowry said Monday in an emailed statement.

Suncor shares rose 1.7% to C$36.90 Monday in Toronto. Canadian Oil Sands gained 2.8% to C$8.56.

Abandoning Bid

Calgary-based Suncor has said it might scrap its offer if Alberta regulators gave the company more time to solicit competing bids. Suncor is reviewing the decision and determining its next steps, said Sneh Seetal, a company spokeswoman.

“Tactically, it makes sense if Suncor pulls their bid because they’re not getting anything from the additional time,” said Sandy Edmonstone, executive director and deputy head of global oil and gas at Macquarie Capital in Calgary.

The decline in crude prices by more than half from their 2014 peak has forced both companies, as well as rivals, to cut costs in an effort to make production in northern Alberta profitable. Suncor CEO Steve Williams has said the company is looking at other acquisitions to take advantage of the C$10 billion ($7.49 billion) of free cash flow the oil producer has amassed since 2010.

“As a Suncor shareholder I don’t really care if they get it or not,” said John Kim, fund manager at Aston Hill Financial Inc. in Toronto. His firm manages about C$3 billion, including shares of Suncor. “It was opportunistic, they saw value in a slightly distressed company," he said, and the chance to take it over at what would be "a huge premium for shareholders."