Tick Tock: Suncor Energy offer to acquire Canadian Oil Sands set to expire soon

Source: Suncor

Suncor Energy is urging shareholders of Canadian Oil Sands Limited to tender their shares to Suncor's offer before it expires at 6:00 p.m. MT (8:00 p.m. ET) on Fri. January 8, 2016.

Suncor Energy is urging shareholders of Canadian Oil Sands Limited ("COS") to tender their shares to Suncor's offer before it expires at 6:00 p.m. MT (8:00 p.m. ET) on Fri. January 8, 2016 and recommended that shareholders get instructions to brokers immediately to ensure that they are processed in time as certain brokers and intermediaries will have tender deadlines on Tuesday or Wednesday of this week.

As announced on October 5, 2015, Suncor is proposing to acquire all of the outstanding shares of COS. Under the terms of the offer, each COS shareholder will receive consideration of 0.25 of a Suncor share per COS share. Based on the closing price of Suncor's shares on December 31, 2015, the offer currently represents an implied value of $8.93 per COS share or a significant 44% premium to the pre-offer trading price of $6.19 per COS share.

In addition, COS shareholders will receive a 45% cash dividend increase. COS shareholders will also benefit from ongoing ownership in shares of Suncor, Canada's leading integrated energy company. Suncor's integrated business model and strong balance sheet have consistently delivered superior returns to shareholders throughout the price cycle. Over the five years ending October 2, 2015, through changing oil price environments, Suncor increased its dividend by 190% and delivered a total shareholder return of over 15%. During that same period, Canadian Oil Sands cut its dividend by 90% and its shareholders endured a negative total return of 69%.

Suncor urges COS shareholders to consider the following facts:

  1. If the offer is rejected, shares of COS may drop in value well below the unaffected pre-bid price of $6.19, based on other recent examples in the marketplace, the 20% drop in the price of benchmark WTI crude oil since Suncor announced its offer on October 5, 2015 and the continued operating challenges at Syncrude.
  2. Based on the current oil price outlook, it could be many years before COS is able to pay down its debt levels and increase its dividend.
  3. COS' only operating asset, Syncrude, continues to suffer operational challenges and has failed for the fourth consecutive year to achieve even the lowest-end of COS' annual production guidance range. By tendering, COS shareholders will join Suncor, and we believe Suncor will have the capability and influence to drive real production improvements at Syncrude.

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