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MEG Energy urges shareholders to reject Husky takeover, solicits other bids

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MEG Energy urges shareholders to reject Husky takeover, solicits other bids

MEG Energy Corp. is asking its shareholders to reject an unsolicited C$3.3 billion cash-and-stock buyout offer from Husky Energy Inc., saying the offer "significantly undervalues" the MEG shareholders' investments in the company.

MEG also said in an Oct. 17 statement that its stand-alone plan has more value than the Husky offer, which totaled C$6.4 billion including assumption of debt. MEG said it has begun a process to solicit interest and is confident that a better alternative may come along.

"With a substantially improved balance sheet and continued focus on execution and cost control, we expect all future growth to be fully funded through internal sources, while having significant free cash flow to pay down debt and return money to MEG shareholders." MEG CEO Derek Evans said. "All of these uses of our capital will drive significant MEG shareholder value."

Husky Energy late in September made a takeover bid for the Canadian oil sands producer at a 37% premium to MEG shareholders as of the Sept. 28 stock market close. With Husky's offer, MEG holders have the option to receive up to C$11 or up to 0.485 Husky share for each MEG share. MEG shares have since captured nearly all of that premium, closing at C$10.79 on Oct. 17.

Husky formally filed its offer to buy out MEG in early October.