The merged
Cenovus CEO
“We will be a leaner, stronger and more integrated company, exceptionally well-suited to weather the current environment and be a strong Canadian energy leader in the years ahead,” Pourbaix said in the statement.
“The diverse portfolio will enable us to deliver stable cash flow through price cycles, while focusing capital on the highest-return assets and opportunities. The combined company will also have an efficient cost structure and ample liquidity.”
Husky is controlled by
Both entities have agreed to support the transaction, which will leave them with about 27.2 per cent of the merged company. They've also agreed to a standstill agreement under which they are subject to certain voting requirements and transfer restrictions for a maximum of five years.
“Cenovus is pleased to have Husky’s significant shareholders, with their strong ties to
The deal is the latest sign of consolidation in an energy sector that has been battered by the twin crises of the COVID-19-related economic slowdown and low crude oil prices.
Last Monday,
Earlier in the month, one analyst pointed to the acquisition of a 17.6 per cent stake in
News of the Cenovus-Husky deal follows a Friday announcement from
Combining the companies will create annual savings of
“Bringing our talented people and complementary assets together will enable us to deliver the full potential of this resilient new company," Husky CEO
"The integration of Cenovus’s best-in-class in situ oil sands assets with Husky’s extensive North American upgrading, refining and transportation network ... will create a low-cost competitor and support long-term value creation.”
The combined company will be the third largest Canadian oil and natural gas producer, based on total company production, Cenovus said. It will have low exposure to oilsands benchmark crude, which typically trades at a discount to North American benchmark
The transaction has been approved by both boards and is expected to close in the first quarter of 2021, pending shareholder and regulatory approvals.
Husky shareholders will receive 0.7845 of a Cenovus share plus 0.0651 of a Cenovus share purchase warrant in exchange for each Husky common share.
This report by
Companies in this story: (TSX:CVE, TSX:HSE)
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