Energy companies and domestic rivals Cenovus Energy and Husky Energy Inc. are set to combine in a $2.9 billion takeover that will see the two companies merge into what will be Canada’s third largest energy group, trailing behind Canadian Natural Resources and Suncor Energy.
Cenovus shareholders are scheduled to control 61% ownership of the new company, while Husky—funded heavily by Hong Kong-based billionaire Li Ka-shing—is expected to own the remaining fraction, in exchange for 0.7485 Cenovus shares.
While shares of the Calgary-based Cenovus dropped in value by 13.6% on the New York Stock Exchange (now $3.20), Husky Energy has enjoyed a 9.55% rise during early trading on the Toronto Stock Exchange.
Despite his company’s stock exchange setback, Cenovus CEO Alex Pourbaix remains confident that this move will propel his business to new heights: “We will be a leaner, stronger and more integrated company, exceptionally well-suited to weather the current environment and be a strong Canadian energy leader in the years ahead,” Pourbaix confidently proclaimed.
He also stated that the merger would lead to the development of a more diverse portfolio, which in turn would help Cenovus to deliver a steadier cash flow.
