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Canadian Husky Energy proposes $5 billion deal to acquire MEG Energy

According to MEG, formal offer is yet to be proposed by Husky

Canada based Husky Energy Inc, has made an unsolicited bid to acquire rival MEG Energy Corp. The deal valued at C$6.4 billion (USD5 billion) including debt.

To be huge when combined, Husky estimates

As the oil and gas producing company, Husky said, the combined company would have total production of more than 410,000 barrels of oil equivalent per day (boepd) and refining and upgrading capacity of about 400,000 barrels per day (bpd).

Rob Peabody, Chief Executive, Husky, said that the combination of MEG’s top-quality assets and staff with its own production and downstream network would allow MEG to circumvent some of the effects from the Canadian crude discount, and provide benefits for both sets of shareholders.

This offer bases the fact that, many Canadian oil producers have faced issues with transportation as output has surged, pushing Canadian heavy crude to near-historic discounts to U.S. light crude.

Will consider and evaluate the Husky’s offer if received, says MEG

MEG, in a statement, said that its board will consider and evaluate the Husky’s unsolicited offer and the related takeover bid circular, if and when received; moreover, it has formed a special committee of independent directors and has retained financial and legal advisers.

MEG, told, “No formal offer has been made,” and added, “MEG shareholders are advised to take no action with respect to any Husky offer until the Board of Directors has had an opportunity to fully review the offer, when received, and to make a recommendation as to its merits.”

Under the terms of the proposal, MEG shareholders will have the option to choose to receive consideration of C$11 in cash or 0.485 of a Husky share for every share held.

Peabody, Chief Executive, Husky, stated, “The MEG Board of Directors has refused to engage in a discussion on the merits of a transaction, giving us no option but to bring this offer directly to MEG shareholders.”

Reportedly, Husky’s offer delivers a 44 percent premium to the 10-day volume-weighted average of MEG’s recent share price, and a 37 percent premium to MEG’s recent day closing share prices. In this deal, the acting financial adviser is Goldman Sachs Canada Inc, while, Osler, Hoskin & Harcourt LLP is acting as the lead legal adviser to Husky.