TORONTO (miningweekly.com) – The board of takeover target Canadian Oil Sands (COS) adopted a new shareholder rights plan, or so-called ‘poison pill’, on Wednesday - a direct response to Suncor Energy’s $4.3-billion hostile takeover bid launched on Monday.
The ‘poison pill’ was intended to give the board more time to consider and evaluate Suncor's offer and any other unsolicited take-over bid or other strategic alternatives.
The rights plan would give the COS board and shareholders at least 120 days to consider any offers.
The new shareholder rights plan would be triggered if anyone buys 20% or more of COS. At that point, other shareholders in the target company would be allowed to buy stock at a discount, making the acquisition less attractive to a hostile bidder.
In announcing the shareholder rights plan, COS said Suncor's public offer valued the company at substantially less than a similar nonbinding expression of interest that COS received from Suncor on April 9.
Under the terms of Suncor’s latest offer, each COS shareholder would receive one-quarter of a Suncor share, or about C$8.84, for each share tendered. Including COS's estimated outstanding net debt of $2.3-billion, as at June 30, the potential transaction was valued at about C$6.6-billion.
Suncor was after COS’s main asset, a 36.74% stake in one of the largest oil sands operations north of Fort McMurray, in Alberta, in which Suncor owned 12%. Other Syncrude partners included Imperial Oil (25%), Sinopec (9.03%), Nexen (7.23%) and Murphy Oil and Mocal Energy, each owning 5%.
Owing to COS’s stock trading above the offer price so far this week, market spectators were either expecting Suncor to come forward with a sweetened offer, or another rival active in the Canada’s oil patch to step forward with a competing bid.