Canadian Oil Sands Trust extended its friendly takeover bid for Canada Southern Petroleum Ltd. on Saturday after acquiring nearly two thirds of the Calgary-based natural gas explorer.
The oilsands operator, the biggest partner in the Syncrude venture in northern Alberta, announced it is extending its bid to Sept 6 after buying 9.8 million common shares of Canada Southern, or 65 per cent of the target company (TSX:CSW).
The company hopess the extra two weeks or so will allow shareholders who had tendered to a rival offer from junior Canadian Superior Energy Inc. to change their minds.
Petro-Canada had also bid for the company but dropped out several weeks ago after Canada Southern brought in Canadian Oil Sands as a white knight bidder and pushed up the price of a successful takeover.
The $13.10 US a share bid from Canadian Oil Sands values Canada Southern at about $197 million US, or $219 million Cdn.
The takeover became easier for Canadian Oil Sands Trust a few weeks ago when it reduced the number of shares required for a successful bid to a bare majority from its earlier 67 per cent threshold.
"We are pleased to have surpassed our minimum tender conditions for our offer to acquire Canada Southern, which enables us to proceed with this transaction," Canadian Oil Sands' president and CEO Marcel Coutu said in a release Saturday.
"Having now acquired control of Canada Southern, we encourage remaining shareholders to tender to our offer, which is unanimously recommended by Canada Southern's board of directors. We would also note that U.S. securities rules dictate that this will be the final opportunity to tender to our offer."
Canadian Oil Sands said it intends to buy the rest of Canada Southern shares not tendered to its bid through a compulsory acquisition, statutory arrangement, amalgamation, merger, reorganization, consolidation, recapitalization or any other type of acquisition transaction equal to $13.10 US a share.
"We are very encouraged to see that the majority of Canada Southern shareholders have recognized the value and certainty of the Canadian Oil Sands offer and have tendered their shares to it," Richard McGinity, chairman of the Canada Southern board, said in a separate release.
McGinity said that with Canadian Oil Sands winning control of his company, the Canadian Superior offer is worth only about $7.97 US a share, and he urged stockholders who have already tendered their shares to that bid to "withdraw them immediately."
"The Canada Southern board strongly recommends that those shareholders who have not already tendered to the Canadian Oil Sands offer do so before the subsequent offering period expires Sept. 6," the chairman said.
Canadian Oil Sands, a pure-play oilsands producer that owns about 35 per cent of the Syncrude project, began bidding for Canada Southern in the middle of May as an alternative to a hostile offer from Petro-Canada (TSX:PCA).
Both companies sought Canada Southern's 710 square kilometres of acreage in Canada's Arctic islands and potential natural gas reserves of nearly one trillion cubic feet.
Petro-Canada, which has an operating stake in most of Canada Southern's Arctic acreage, saw the company as a natural tie-in acquisition that would help add to its already substantial Arctic portfolio.
But Canadian Oil Sands argued that Canada Southern was complementary to its long-term strategy since the Arctic reserves would provide a natural, long-term hedge against rising gas prices, one of the largest expenses in oilsands production.
The two companies each sweetened their offer three times until Petro-Canada announced last month that the bidding had gone past its acceptable range and backed out.
A third bidder, Canadian Superior (TSX:SNG) also made a cash and share bid, but that offer was rejected by Canada Southern.
A key attraction in the bidding war was Canada Southern's "net carried interests" in the major gas discoveries around Melville Island. That means it can avoid paying its share of future development costs until the project is completed.
Any potential project could easily cost billions of dollars, since the only way to get the gas reserves to southern markets would be to build a liquefied natural gas plant and a port able to withstand Arctic ice and big enough to handle huge tankers.
The oilsands operator, the biggest partner in the Syncrude venture in northern Alberta, announced it is extending its bid to Sept 6 after buying 9.8 million common shares of Canada Southern, or 65 per cent of the target company (TSX:CSW).
The company hopess the extra two weeks or so will allow shareholders who had tendered to a rival offer from junior Canadian Superior Energy Inc. to change their minds.
Petro-Canada had also bid for the company but dropped out several weeks ago after Canada Southern brought in Canadian Oil Sands as a white knight bidder and pushed up the price of a successful takeover.
The $13.10 US a share bid from Canadian Oil Sands values Canada Southern at about $197 million US, or $219 million Cdn.
The takeover became easier for Canadian Oil Sands Trust a few weeks ago when it reduced the number of shares required for a successful bid to a bare majority from its earlier 67 per cent threshold.
"We are pleased to have surpassed our minimum tender conditions for our offer to acquire Canada Southern, which enables us to proceed with this transaction," Canadian Oil Sands' president and CEO Marcel Coutu said in a release Saturday.
"Having now acquired control of Canada Southern, we encourage remaining shareholders to tender to our offer, which is unanimously recommended by Canada Southern's board of directors. We would also note that U.S. securities rules dictate that this will be the final opportunity to tender to our offer."
Canadian Oil Sands said it intends to buy the rest of Canada Southern shares not tendered to its bid through a compulsory acquisition, statutory arrangement, amalgamation, merger, reorganization, consolidation, recapitalization or any other type of acquisition transaction equal to $13.10 US a share.
"We are very encouraged to see that the majority of Canada Southern shareholders have recognized the value and certainty of the Canadian Oil Sands offer and have tendered their shares to it," Richard McGinity, chairman of the Canada Southern board, said in a separate release.
McGinity said that with Canadian Oil Sands winning control of his company, the Canadian Superior offer is worth only about $7.97 US a share, and he urged stockholders who have already tendered their shares to that bid to "withdraw them immediately."
"The Canada Southern board strongly recommends that those shareholders who have not already tendered to the Canadian Oil Sands offer do so before the subsequent offering period expires Sept. 6," the chairman said.
Canadian Oil Sands, a pure-play oilsands producer that owns about 35 per cent of the Syncrude project, began bidding for Canada Southern in the middle of May as an alternative to a hostile offer from Petro-Canada (TSX:PCA).
Both companies sought Canada Southern's 710 square kilometres of acreage in Canada's Arctic islands and potential natural gas reserves of nearly one trillion cubic feet.
Petro-Canada, which has an operating stake in most of Canada Southern's Arctic acreage, saw the company as a natural tie-in acquisition that would help add to its already substantial Arctic portfolio.
But Canadian Oil Sands argued that Canada Southern was complementary to its long-term strategy since the Arctic reserves would provide a natural, long-term hedge against rising gas prices, one of the largest expenses in oilsands production.
The two companies each sweetened their offer three times until Petro-Canada announced last month that the bidding had gone past its acceptable range and backed out.
A third bidder, Canadian Superior (TSX:SNG) also made a cash and share bid, but that offer was rejected by Canada Southern.
A key attraction in the bidding war was Canada Southern's "net carried interests" in the major gas discoveries around Melville Island. That means it can avoid paying its share of future development costs until the project is completed.
Any potential project could easily cost billions of dollars, since the only way to get the gas reserves to southern markets would be to build a liquefied natural gas plant and a port able to withstand Arctic ice and big enough to handle huge tankers.
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