In a move that would create the third-largest oil and natural-gas producer in Canada and the second-largest Canadian refiner, Cenovus and Husky Energy have announced their intention to merge.
If the merger goes ahead, Husky shareholders would receive a roughly 21 percent premium to their shares, the companies said.
Canadian oil-sands producer Cenovus Energy Inc. and Husky Energy Inc., controlled by Hong Kong billionaire Li Ka Shing, agreed to merge in an all-stock deal valued at 3.8 billion Canadian dollars, which is US$2.9 billion.
The transaction marks the latest in a wave of energy deals, as companies merge after a drop in energy prices this year.
The companies began talks about a tie-up in the spring, as oil prices crashed because of the economic slowdown caused by the COVID-19 pandemic and after major oil producers Saudi Arabia and Russia split over a plan to cut global supplies.
Husky CEO Robert Peabody said the deal will give the combined company more access to capital, as investors are increasingly looking to invest in the larger companies. “Scale is becoming more and more important in order to be relevant to the investor,” he said.
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