- Stocks Spooked by Signs that Economy Remains Weak
- GM Creditor Cracks Show as Bankruptcy Threat Looms
- Yahoo to Cut Hundreds of Jobs: Source
- Pirates Seize 4 More Ships, 60 Crew Members
- Big Cracks Starting To Show In Commercial Real Estate
- EBay Plans Spinoff of Skype Through IPO
- Procter & Gamble Boosts Dividend by 10%
- CSX Profit Beats Estimates But Is Lower From Year Ago
- Toyota Prius Orders to Outpace Honda Insight
Text Size 
Suncor Energy, Canada' No.2 oil company, agreed to buy rival Petro-Canada for about C$18.43 billion ($14.86 billion) to expand its oil sand reserves and create the country's biggest energy group.
 |
The deal comes after a period of missed earnings targets and project delay at Petro-Canada, and is expected to be completed in the third quarter of 2009.
The all-share offer represents a premium of about 28 percent to the C$29.65 closing price of Petro-Canada shares on Friday as assuming 484.4 million Petro-Canada shares outstanding as of Dec. 31, 2008.
On completion of the proposed deal, Suncor's [SU
Loading...
()
] existing shareholders will own about 60 percent and Petro-Canada shareholders will own about 40 percent of the merged company, the companies said.
Petro-Canada [PCZ
Loading...
()
] shareholders will receive 1.28 common shares of the merged company for each Petro-Canada share, while Suncor shareholders will get one common share of the merged company for each Suncor share.
The companies expect to achieve annual operating expenditure reductions of $300 million.
They also expect to achieve annual capital efficiencies of about $1 billion through elimination of redundant spending and targeting capital budgets to high-return, near term projects.
The deal would combine Petro-Canada's extensive retail gasoline and refining business and its international operations with Suncor's extensive operations in the oil sands, where it is the No. 2 producer behind Syncrude Canada Ltd.
Petro-Canada delayed its Fort Hills oil sands project last year because of rising costs.
Petro-Canada has also faced pressure to boost the value of its shares, which have lagged rivals because the company's management has failed to boost production and the firm's repeated failures to meet earnings targets.
Its shares have dropped 31 percent over the past 12 months while Suncor stock is down 35 percent.
The news confirms a report in the Wall Street Journal which said the two companies were in advanced talks.
Print
Email
Data is a real-time snapshot *Data is delayed at least 15 minutes