Cenovus Energy said on Friday it will acquire MEG Energy in a cash-and-stock deal worth C$7.9 billion ($5.68 billion), including debt, creating one of Canada’s largest oil sands producers.
The transaction will bring together MEG’s Christina Lake oil sands operations in Alberta with Cenovus’ adjacent assets, boosting combined output to more than 720,000 barrels per day.
Cenovus is offering C$27.25 per share for MEG, valuing the company at roughly C$6.93 billion, according to Reuters calculations.
The offer represents a 27.9% premium to MEG’s share price before Strathcona Resources (SCR.TO) launched an unsolicited bid in May.
MEG board backs the transaction
After months of review, MEG Energy’s deal has received unanimous approval from the board.
MEG was subject to a hostile bid from Strathcona in June that it rejected as insufficient, later initiating a strategic process to study alternatives.
On Friday, MEG chairman James McFarland said the board and a special committee determined the transaction presented the best total value for shareholders.
“The board and special committee have concluded that the proposed transaction with Cenovus represents the best strategic alternative,” McFarland said.
He also noted that the decision followed careful consideration of Strathcona’s unsolicited bid and engagement with multiple potential partners.
The arrangement gives MEG shareholders a mix of cash and stock: 75% will be paid in cash and 25% in Cenovus shares.
Industry impact and timeline
The merger of Cenovus and MEG will establish a major player in Canada’s oil sands sector, merging activities in Alberta’s Christina Lake region.
In the face of shifting petroleum prices, oil sands firms are increasingly turning to mergers and acquisitions to increase production, cut costs, and improve their balance sheets.
The transaction is scheduled to finalise in the early fourth quarter of 2025, pending shareholder and regulatory approvals.
Cenovus’ position as a leading Canadian energy business will be strengthened by the integration of MEG’s assets, while MEG shareholders will benefit immediately from a considerable premium and partial exposure to Cenovus’ future performance.
Valuation context
Cenovus’ C$27.25 per share offer for MEG represents a substantial premium to the levels the stock traded at before Strathcona’s hostile bid earlier this year.
The deal underscores the importance of scale in the oil sands, where large, contiguous projects can deliver cost efficiencies and stable long-term production.
The acquisition values MEG’s equity at nearly C$7 billion, with the enterprise value rising to C$7.9 billion when debt is included.
Cenovus’ move reflects a broader consolidation trend in Canada’s energy sector, as companies seek to strengthen competitiveness and deliver shareholder returns in an environment shaped by regulatory challenges and energy transition pressures.
For MEG, the transaction concludes a strategic review that began after rejecting Strathcona’s offer.
For Cenovus, it marks a decisive step in expanding its oil sands footprint and reinforcing its role as a central player in Canadian oil production.
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