Suncor clinches deal for rival Canadian Oil Sands

Suncor clinched a deal on Monday to buy Canadian Oil Sands, after upping its bid for a rival, in what some believed was the opening shot in the race to consolidate in that country’s unconventional oil sector.

Under the revised terms of the offer, shareholders in the latter were set to receive 0.28 shares in Suncor in exchange for each one held in COS, up from 0.25 shares beforehand, valuing the company at CAD$6.6bn (£13.66bn) once its debt load of CAD$2.4bn was accounted for.

The new offer valued each COS share at CAD$8.74 versus CAD$7.81 under the original terms proposed.

COS’s board decided the new offer was in the best interests of its shareholders, going against the opinion of its financial adviser, RBC Capital Markets, while emphasising the 37% decline in spot oil prices since the first offer was tabled.

Under the new terms of the deal, the minimum tender condition – the percentage of stock which needed to be tendered for the transaction to go through – was lowered from 66% to 51%.

As a result, under US laws the transaction would be subject to personal income taxes in that country.

Besides the purchase of a minimum of 51% of COS stock, Suncor also committed itself to a subsequent transaction to buy any shares which had not been tendered.

Monday’s deal would turn Suncor into the largest shareholder in the Syncrude oil sands complex.

As of 16:32 shares in Canadian Oil Sands were 11.90% higher to CAD$8.37 in trading on the Toronto Stock Exchange.