Cenovus Energy to Acquire Husky Energy
Posted on 10/26/2020
Cenovus Energy Inc. is merging with Husky Energy Inc. to create a new integrated Canadian oil and natural gas company with an advantaged upstream and downstream portfolio that is expected to provide enhanced free funds flow generation and superior return opportunities for investors. The companies have entered into a definitive arrangement agreement under which Cenovus and Husky will combine in an all-stock transaction valued at C$ 23.6 billion, inclusive of debt. The combined company will operate as Cenovus Energy Inc. and remain headquartered in Calgary, Alberta. The transaction has been unanimously approved by the Boards of Directors of Cenovus and Husky and is expected to close in the first quarter of 2021.
Under the terms of the definitive agreement, Husky shareholders will receive 0.7845 of a Cenovus share plus 0.0651 of a Cenovus share purchase warrant in exchange for each Husky common share. This represents a 21% premium, excluding warrants, relative to Husky’s five-day volume-weighted average price per share as at October 23, 2020. Including the warrants, the premium is 23%.
Hutchison Whampoa Europe Investments S.àr.l. is the biggest shareholder of Husky Energy currently, with a 40.2% stake. Immediately following the close of the transaction, and prior to the exercise of any warrants issued to Husky shareholders as part of this transaction, Cenovus shareholders will own approximately 61% of the combined company, and Husky shareholders will own approximately 39%. Immediately following the close of the transaction, Hutchison Whampoa Europe Investments S.àr.l. and L.F. Investments S.àr.l. will respectively hold approximately 15.7% and 11.5% of the combined company.
Advisors
RBC Capital Markets and TD Securities are acting as financial advisors to Cenovus, and have each provided a verbal opinion to the Board of Directors of Cenovus that the consideration to be paid by Cenovus under the arrangement agreement is fair, from a financial point of view, to Cenovus subject to the assumptions made and limitations and qualifications included in the written opinion of each financial advisor. Bennett Jones LLP and Paul, Weiss, Rifkind, Wharton & Garrison LLP are acting as Cenovus’s legal advisors.
Goldman Sachs Canada and CIBC Capital Markets are acting as financial advisors to Husky. Osler, Hoskin & Harcourt LLP and Norton Rose Fulbright US LLP are Husky’s legal advisors.
Hutchison Whampoa Europe Investments S.àr.l.’s legal advisors are Stikeman Elliott LLP and Skadden Arps Slate Meagher & Flom LLP.
L.F. Investments S.àr.l.’s legal advisor is Marvin Yontef, Esq.
