The proposed merger between Canadian energy companies Cenovus Energy and Husky Energy has been met with mixed reactions from shareholders. The deal, which was announced in October, would see Cenovus acquire all of Husky’s outstanding shares in a stock swap worth $3.8 billion.
On Tuesday, Cenovus held a virtual shareholder meeting to vote on the deal. The company’s CEO, Alex Pourbaix, expressed confidence in the merger, stating that it would create a stronger, more resilient company in the face of the current economic challenges.
However, not all shareholders were convinced. Some expressed concerns about the high debt levels that would result from the merger, as well as the potential impact on dividends and share prices.
Meg Energy, a major shareholder in both Cenovus and Husky, announced that it would be voting against the deal. In a statement, Meg Energy CEO Derek Evans stated that the company believes the merger is not in the best interest of shareholders and that it would be voting its 27% stake against the deal.
Despite this opposition, the majority of Cenovus shareholders voted in favor of the merger, with 93% of votes cast in support. The deal is still subject to regulatory approvals and is expected to close in the first quarter of 2021.
If the merger is successful, the combined company would become the third-largest Canadian oil and gas producer, behind Suncor Energy and Canadian Natural Resources. It would also have a stronger position in the oil sands and offshore drilling markets.
The merger is seen as a strategic move for both companies, as they face challenges such as low oil prices and the transition to cleaner energy sources. It is also expected to result in cost savings of $1.2 billion per year and reduce the combined company’s greenhouse gas emissions.
While the shareholder vote is a significant step towards finalizing the merger, there are still hurdles to overcome. The deal must receive approval from the Competition Bureau and the Alberta Energy Regulator, as well as the majority of Husky shareholders.
In the meantime, both Cenovus and Husky will continue to operate as separate entities. But if the merger is ultimately approved, it could have a significant impact on the Canadian energy industry and the global market.
