Suncor Energy (NYSE:SU, TSE:SU) boss says holders of Canadian Oil Sands (TSE:COS) shares should to make up their own minds about his company’s $4.5bn takeover offer.
Earlier today COS directors unanimously rejected the Suncor offer and, in a statement, described it as “opportunistic and exploitative.”
“The bid fails to recognize that COS is strongly positioned to withstand low oil prices and emerge with even greater value when oil prices recover,” COS said.
Moreover, COS identified fifteen reasons – which it describes as ‘compelling’ – for shareholders to reject the takeover offer.
COS said its recommendation was based on a full review of the offer. These reasons include the view that Suncor has undervalued what COS says are “unique strategic assets” and says the offer doesn’t account for the company’s ‘superior leverage to oil prices’.
Suncor, in a subsequent statement, responded to the COS comments with the assertion that the terms of its offer reflect a “new business reality”.
Steve Williams, Suncor chief executive, said: "We encourage Canadian Oil Sands shareholders to determine for themselves whether our offer is in their best interests.
"There is nothing in the COS Directors' Circular nor in the conference call comments this morning that detract from the strength of our compelling Offer.
“Our Offer reflects the new business reality, and when proposed, included a substantial price premium of 43% and a dividend increase of 45%.
“It also represents an opportunity for investment in a financially stronger, more diversified and stable company that has considerable upside potential in a rising price environment, but can also deliver significant value should oil prices stay lower for longer."
This afternoon in Toronto, COS stock was down 1.8% at C$9.76 each, while Suncor was down 2.6% in New York at US$27.85.