Husky Energy has scrapped its proposed C$6.4bn ($5bn) takeover of Canadian oil sands producer MEG Energy, citing various factors including insufficient shareholder support.
The Canadian energy company made its offer to acquire MEG Energy in September 2018. However, it said that the offer expired earlier this week while the minimum tender condition was not satisfied.
Husky Energy, which has decided not to extend its offer, said that the proposal also lacked support from MEG Energy’s board. In October 2018, the board of the oil sands producer rejected the offer on the basis that it had undervalued the company and its assets significantly.
Husky Energy said that there have been various negative surprises in the business and economic environment since the time of making the offer.
One of them being the Alberta government’s decision to depart from free market principles, said the company. It added that the change in policy has brought in uncertainty through the imposition of production cuts as mandated by the government.
Husky Energy also blamed “continued lack of meaningful progress” on the developments of Canadian oil export pipelines.
Husky Energy CEO Rob Peabody said: “Given the outcome of the tender process, Husky will continue to focus on capital discipline and the delivery of the five-year plan we set out at our Investor Day in May 2018.
“We are investing in reliable, higher margin production growth that continues to lower the oil price we need to break even. Both our Integrated Corridor and high-netback Offshore businesses receive global pricing and provide insulation from ongoing commodity price volatility.”
Husky Energy said that MEG shares that were tendered to the offer will be returned to shareholders.
MEG Energy president and CEO Derek Evans said: “MEG Shareholders’ rejection of the Husky offer confirms that the bid did not fully recognize the quality and long-term potential of MEG.
“During this process we had the opportunity to meaningfully engage with a significant number of our shareholders. We appreciate their ongoing support and feedback on the strengths of, and opportunities for the company.”
Earlier this month, Husky Energy announced its intentions to undertake a strategic review and also to potentially divest its retail and commercial fuels business in Canada along with the Prince George Refinery.