- Cenovus Energy Inc (NYSE: CVE) (TSE: CVE) announced it is buying Husky Energy Inc. (TSE: HSE) in an all-stock deal that is valued at C$3.8 billion ($2.9 billion). These are the details you should know.
Cenovus Energy Inc (NYSE: CVE) (TSE: CVE) announced it is buying Husky Energy Inc. (TSE: HSE) in an all-stock deal that is valued at C$3.8 billion ($2.9 billion). This deal will create the third-largest oil and gas production company.
The consolidation of energy companies has been accelerating as the economic crisis caused by the pandemic has been pressuring the industry. For example, Concho Resources recently announced a deal to be acquired by ConocoPhillips for $9.7 billion. And Chevron announced a deal to buy Noble Energy for $4.2 billion.
The deal also makes Cenovus more of an integrated producer with refiners in the U.S. and Canada. And the combined company will be able to produce about 750,000 barrels of oil equivalent per day.
Once this deal closes, Cenovus shareholders are going to own 61% of the combined entity and Husky shareholders will control the rest. Hutchison Whampoa is going to have a 15.7% stake in the new company. Currently, Hutchison Whampoa is the largest shareholder of Husky currently with a 40.2% stake.
The total value of the deal for Husky is about C$23.6 billion, including debt. And the combined company is expected to generate annual synergies of about C$1.2 billion. The combined company will operate as Cenovus Energy with headquarters in Alberta.
Cenovus President and Chief Executive Officer Alex Pourbaix will serve as CEO of the merged company. And Husky’s chief financial officer Jeff Hart will become the CFO of the combined company.
The deal has been approved by the boards of both Cenovus and Husky. And the deal is expected to close in the first quarter of 2021.
KEY QUOTES:
“We will be a leaner, stronger, and more integrated company, exceptionally well-suited to weather the current environment and be a strong Canadian energy leader in the years ahead. The diverse portfolio will enable us to deliver stable cash flow through price cycles, while focusing capital on the highest-return assets and opportunities. The combined company will also have an efficient cost structure and ample liquidity. All of this supports strong credit metrics, accelerated deleveraging, and an enhanced ability for return of capital to shareholders.”
“Cenovus is pleased to have Husky’s significant shareholders, with their strong ties to Canada, exceptional business capabilities and knowledge of Asia and Husky’s Asian assets, in particular, become one of our long-term shareholders. We value the perspectives they will provide as highly successful international investors.”
— Alex Pourbaix, Cenovus President and Chief Executive Officer
“Bringing our talented people and complementary assets together will enable us to deliver the full potential of this resilient new company. The integration of Cenovus’s best-in-class in situ oil sands assets with Husky’s extensive North American upgrading, refining and transportation network and high netback offshore natural gas production, will create a low-cost competitor and support long-term value creation.”
— Rob Peabody, Husky President and Chief Executive Officer
