Canadian Oil Sands Attracts Interest

Canadian Oil Sands, which is trying to attract a white knight after a hostile bid from Suncor Energy, needs more time to review its options as more than two dozen parties have expressed an interest in the company, according to a regulatory filing. But an affidavit filed on behalf of COS says 25 other parties have looked into possibly investing in COS, with four “highly credible” ones having signed confidentiality agreements.

If Suncor decides to walk away from its offer, another Calgary-based analyst who asked not to be named said the company might opt to return cash to its shareholders rather than target another oil sands operator.

The interest by other parties may slow Suncor’s momentum ahead of a December 4 deadline it has set for a response to its all-stock bid – now worth about 4.47 billion Canadian dollars ($3.36 billion) – for Canadian Oil Sands, the largest owner of the Syncrude oil-sands mining consortium.

Suncor Chief Executive Officer Steven Williams said last week the company reached out to 60 percent of Canadian Oil Sands’ institutional investors and that the “majority” support the bid. The Alberta Securities Commission has scheduled two days of hearings starting Thursday to consider Canadian Oil Sands’ effort to block that bid by ruling on its updated shareholder-rights plan. Canadian Oil Sands has called it “substantially undervalued, obviously opportunistic and exploitive”.

“I firmly believe that with more time to run our process, there is a good prospect for one or more counterparties to make a proposal”, Anderson said.

“Hope isn’t a strategy”, Suncor warned in a blunt letter to COS shareholders that noted the “consistently disappointing performance” of the company’s single asset – Syncrude.

On the witness stand at an Alberta Securities Commission hearing, Suncor’s investment banker denied the suggestion that he had “no idea” whether or not other companies were interested in, or capable of, buying Canadian Oil Sands. “It would not need to try to steal time for a decision from our shareholders”, CEO Ryan Kubik said earlier this month. In one-on-one battles with the target, the bidder is successful two-thirds of the time, the analysis shows.

On average, it takes about 41 days for a competitive bid to arise, Atkinson said.

The big question before the ASC is whether or not Canadian Oil Sands would receive another offer under the requested 120-day timeframe.

Shareholders in companies that have successfully fended off a hostile bid don’t tend to fair well, with 63% of them trading on average at a 17% discount to the bid price one year after it was made.