CALGARY — MEG Energy Corp.'s board of directors is urging shareholders to reject an unsolicited takeover offer by oilsands peer Strathcona Resources Ltd., calling it opportunistic and not in the best interests of the company or its investors.
"Strathcona's offer is inadequate by all reasonable measures and is not the right path forward for MEG shareholders," board chair James McFarland said Monday.
The company said it has a plan that the board believes will generate significant free cash flow and shareholder value, underpinned by its assets with decades of growth potential.
The board has authorized a special committee to launch a strategic review with the potential to find an offer superior to its stand-alone plan. Analysts have said a competing offer is likely, citing oilsands majors like Cenovus Energy Inc., Imperial Oil Ltd., and Canadian Natural Resources Ltd. as potential bidders.
MEG operates the Christina Lake oilsands project south of Fort McMurray Alta.
Last month, Strathcona made an offer buy all of the MEG shares it does not already own for a combination of 0.62 of a Strathcona share and $4.10 in cash per MEG share. MEG shares have consistently been trading higher than the implied offer price.
On a call with analysts last month, Strathcona executive chairman Adam Waterous said his company and MEG have assets so complementary they are like "doppelgangers" or "brothers from another mother."
Strathcona and MEG both extract bitumen using steam-driven techniques in eastern Alberta and don't have fuel refining or retail businesses like some bigger oilsands players.
Late last month Strathcona announced an equity commitment letter with Waterous Energy Fund, also led by Waterous. The fund owns almost 80 per cent of Strathcona shares, and the new investment is worth about $662 million.
"As part of the offer, we are asking MEG shareholders to join us as fellow shareholders in Strathcona and trust the Strathcona team as stewards of their capital," Waterous said on May 30.
But McFarland said Monday that the board does not see upside from joining up with Strathcona.
"A combination with Strathcona would expose shareholders to inferior assets and significant capital markets risks, including a $6 billion overhang resulting from Waterous Energy Fund's 51 per cent ownership in the combined company, which would allow WEF investors to realize liquidity over time."
This report by The Canadian Press was first published June 16, 2025.
Companies in this story: (TSX: MEG, TSX: SCR)
Lauren Krugel, The Canadian Press
