Cenovus Energy to acquire Husky

Cenovus Energy has agreed to acquire Huskey Energy to create a new integrated Canadian oil and natural gas company with an advantaged upstream and downstream portfolio worth CAD 23.60 billion (USD 17.97 billion), including debt.

Under the terms of the agreement, the target’s shareholders will receive 0.78 of a scrip, plus 0.07 of a stock purchase warrant in exchange for each item held in the company.

The offer represents a premium of 21.0 per cent to Husky’s five-day volume-weighted average share price as of 23rd October.

Each whole warrant entitles the holder to acquire one Cenovus common share for a period of five years at a price of CAD 6.54 apiece.

Assuming the full exercise of such warrants, the combined company will receive CAD 428.00 million in cash proceeds and implies an equity value of CAD 3.80 billion and an enterprise value for Husky of CAD 10.20 billion.

Closing is expected during the first quarter of 2021 and remains subject to regulatory approvals.

The combined business will achieve annual run rate synergies of CAD 1.20 billion, largely achieved within the first year, with a net-debt-to-adjusted-earnings before interest, taxes, depreciation and amortisation ratio of less than 2.0x expected to occur in 2022.

Together, the groups will be the third largest Canadian oil and natural gas producer, based on total company production, with about 750,000 barrels of oil equivalent per day (boe/d) of low-cost oil and natural gas production, including 50,000 boe/d of high free funds flow generating offshore Asia Pacific production.

More:  Autodesk to acquire Aurigo stake

Cenovus and Husky is expecting to generate an incremental CAD 1.20 billion annual free funds flow, comprised of CAD 600.00 million in annual corporate and operating synergies and CAD 600.00 million in annual capital allocation synergies.

According to Zephyr, the M&A database published by Bureau van Dijk, there have been 573 deals targeting oil and gas extraction companies announced worldwide in 2020 to date.

In the largest of these, US-based Patton Oilfield Services is seeking USD 10.24 billion in a round of funding.

Other targets included ADNOC Gas Pipeline Assets, Concho Resources, Parsley Energy and Reliance Industries.

© Zephus Ltd


More from: | Category: M&A News