MEG Energy's Board rejects Husky Energy's takeover offer

MEG Energy Corp. has announced its Board of Directors has unanimously determined that Husky Energy's unsolicited bid to acquire MEG significantly undervalues the common shares of MEG and is not in the best interests of MEG or its common shareholders.

On 2 October 2018, Husky Energy made a formal offer to acquire all of the issued and outstanding common shares, pending the approval of the MEG shareholder, for (i) CAD11.00 (US$8.43) in cash or (ii) 0.485 of a common share of Husky Energy for each Common Share, subject to a maximum aggregate cash consideration of CAD1 billion (US$766.1 million) and a maximum aggregate number of Husky shares of approximately 107 million.

The offer must remain open until at least 16 January 2019 unless otherwise extended, accelerated or withdrawn in accordance with its terms.

Upon receipt of the offer, the Board, operating through a Special Committee, engaged with financial and legal advisors to diligently review it. The Board has unanimously concluded that the offer significantly undervalues the common shares and recommends that MEG shareholders reject it and not tender their common shares.

The Board has received a written opinion from its financial advisor, BMO Capital Markets, to the effect that, as of 16 October 2018, and based upon and subject to the assumptions, limitations and qualifications contained therein, the consideration to be received by the MEG shareholders pursuant to the offer is inadequate, from a financial point of view, to MEG shareholders.

MEG also notes that the Board fully analyzed, vetted and provided feedback to Husky Energy about a financially identical non-binding proposal that Husky made privately to MEG on 8 August 2018.

MEG has retained BMO Capital Markets as financial advisor, and Burnet, Duckworth & Palmer LLP as legal counsel to MEG and the MEG Board and Bennett Jones LLP as legal counsel to the Special Committee.