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Investing.com -- Cenovus Energy Inc (TSX:CVE) announced Wednesday it has amended its agreement to acquire MEG Energy Corp (TSX:MEG), increasing the purchase price and adjusting the payment structure.
Under the revised terms, MEG shareholders can choose to receive either $29.50 in cash or 1.240 Cenovus common shares for each MEG share, subject to pro-ration based on maximum limits of $3.8 billion in cash and 157.7 million Cenovus shares.
The fully pro-rated consideration represents approximately $29.80 per MEG share based on Cenovus’s October 7 closing price, an increase of $1.32 per share from the original offer.
Cenovus President and CEO Jon McKenzie said the company received support from most MEG shareholders but many preferred greater share consideration to "more fully participate in the upside of the combined company." The revised offer provides a 50% cash and 50% Cenovus shares mix.
The special meeting of MEG shareholders has been postponed from October 9 to October 22 to allow time to consider the amended agreement. Cenovus stated it has received key regulatory approvals from both Canadian and U.S. competition authorities.
As part of the amended agreement, Cenovus may now purchase up to 9.9% of MEG’s outstanding shares and intends to vote any acquired shares in favor of the transaction. With the lower maximum cash consideration in the revised deal, Cenovus plans to increase share repurchases over coming quarters.
Cenovus also provided an update on its third-quarter operations, reporting record upstream production of approximately 832,000 barrels of oil equivalent per day, including 640,000 barrels per day from its Oil Sands segment.
Downstream crude throughput reached a record 712,000 barrels per day with 98.8% utilization.
The company completed the previously announced sale of its 50% interest in WRB Refining LP to Phillips 66, receiving approximately $1.8 billion in proceeds on October 1. Net debt at quarter-end was approximately $5.3 billion before these proceeds, or about $3.5 billion after.
In September, Cenovus purchased approximately 21.5 million of its common shares for $512 million at an average price of $23.81 per share, bringing third-quarter share repurchases to 40.4 million shares for $900 million. With net debt below its $4 billion target, the company anticipates continued accelerated share repurchases.
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