According to a statement released on Sunday, oil and natural gas company Cenovus Energy Inc. is expected to join integrated energy company Husky Energy Inc. in what will be an all-stock merger valued at C$23.6 billion ($18 billion).
With the boards of both companies having provided their approval of this transaction, the merger is being done in order to integrate the oil and natural gas resources of the two companies and provide investors with a higher return on investment.
Cenovus is expected to own a 61% stake in the new company, while Husky will take 39% ownership. CK Hutchison Holdings, a company owned by Hong Kong billionaire Li Ka-shing, will have a stake of approximately 27% in the new company.
Current Husky shareholders will receive 0.7845 of a Cenovus share and 0.0651 of a Cenovus share purchase warrant in exchange for each Husky common share. In total, the new company is expecting C$1.2 billion in cost and capital synergies.
Upon completion of the merger, the new company will inherit a net debt of C$12 billion along with committed credit facilities from a banking syndicate worth C$8.5 billion. The company will continue to operate as Cenovus Energy from its existing headquarters in Calgary, Alberta.
