(Bloomberg) — Cenovus Energy Inc. agreed to buy Athabasca Oil Corp. at an enterprise value of C$5.7 billion ($4 billion), the latest in a wave of consolidation as Canada’s government seeks to grow energy production.
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The cash and share takeover would add about 45,000 barrels of oil equivalent a day to Cenovus’s output and give it significant potential for further growth, according to the statement. The per-share value represents a 13% premium to Athabasca’s closing price on Oct. 2.
Canadian oil sands producers have made a flurry of deals as the industry adapts to a more positive regulatory environment. The federal government wants to expand output and fill new pipelines to boost exports to Asia and lessen reliance on the US amid a grueling trade war.
“This transaction strengthens our position in one of the world’s premier oil-producing regions and is a natural extension of our oil sands strategy,” Jon McKenzie, Cenovus president and chief executive officer, said in the statement on Monday.
The cash portion, accounting for 65% to 75% of the transaction, will be funded with cash on hand and certain short-term borrowings, according to the statement. Cenovus’s financial framework and net-debt target of $4 billion remain unchanged.
The deal has been unanimously approved by the boards of both companies and is expected to close in December, pending approvals from regulators and Athabasca shareholders, the company said.
(Updates with dollar value of transaction in first paragraph.)
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