Canada’s Cenovus Energy to buy Husky Energy for $2.9 billion

In this news, we discuss the Canada’s Cenovus Energy to buy Husky Energy for $2.9 billion.

(Reuters) – Cenovus Energy Inc. CVE.TO has agreed to buy rival Husky Energy Inc. HSE.TO in an all-equity transaction valued at C $ 3.8 billion (C $ 2.9 billion dollars) to create Canada’s third largest producer of oil and gas as a pandemic – collapsing demand and low oil prices are forcing the industry to consolidate.

The deal, announced on Sunday, is the largest in Canada’s energy sector since the start of the pandemic and follows recent major deals in the United States.

Concho Resources Inc CXO.N agreed this month to be taken over by ConocoPhillips COP.N for $ 9.7 billion. This follows the CVX.N $ 4.2 billion purchase of Chevron Corp from Noble Energy.

Canadian companies have been under pressure for six years, since the last downturn, due to pipeline congestion and the leakage of foreign oil companies and investors due to Canada’s high production costs and emissions.

Cenovus’ deal for Husky is valued at C $ 23.6 billion, including debt, the companies said in a joint statement.

Cenovus said the deal would create Canada’s third largest producer based on the company’s total production.

Husky shareholders will receive 0.7845 of a Cenovus share and 0.0651 of a Cenovus share purchase warrant in exchange for each Husky common share, the statement said.

The combined company is expected to generate annual synergies of C $ 1.2 billion and will operate as Cenovus Energy Inc with its headquarters in Alberta, Canada, the release said.

Alex Pourbaix, CEO of Cenovus, will serve as CEO of the merged company with Jeff Hart, currently CFO of Husky, becoming CFO.

Cenovus said the combined company would be able to produce 750,000 barrels of oil equivalent per day (BOE / d).

The transaction was unanimously approved by the boards of directors of Cenovus and Husky and is expected to close in the first quarter of 2021, the companies said.

Report by Ann Maria Shibu in Bengaluru; additional reporting by Rod Nickel in Winnipeg; Editing by Susan Fenton and Nick Zieminski

Original © Thomson Reuters

Originally posted 2020-10-25 07:36:10.

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