May 19, 2020

Canadian Oil Sands responds to Suncor bid with Declaration of Independence

Mergers and acquisitions
Finance
Oil and Gas
Canadian Oil Sands
Sudarshan Sitaula
3 min
Canadian Oil Sands responds to Suncor bid with Declaration of Independence

Canadian Oil Sands shareholders have until Friday to decide whether or not they will accept Suncor’s aggressive takeover bid—but the company is not conceding without a fight. Today Canadian Oil Sands issued an open letter to its shareholders, asking them to stand together in rejecting Suncor’s bid and resolving to stay independent.

“Canadian Oil Sands wasn't looking to sell itself, and Suncor's opportunistic bid does not make us conclude that we should now,” says Don Lowry, Chairman of the Board for Canadian Oil Sands, noting in the letter that the board and its external legal and financial advisors had considered the benefits of sale and other alternatives before deciding on independence as the best option to aim for.

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“The principles that guide our investment in Canadian Oil Sands remain strong: a valuable one-of-a-kind asset, a share price poised to rise with the next uplift in oil prices and generations worth of reserves,” he continues. “You invested in Canadian Oil Sands for a pure-play exposure to oil prices, and you have held your investment through unprecedented hard times in the energy sector. Now is the time to secure the future benefits of an independent Canadian Oil Sands.”

Lowry reassures shareholders that Canadian Oil Sands has the financial resources to ride out the industry’s current financial downturn, and adds that its asset Syncrude has managed to cut costs by $1.3 billion over the last year which should translate to increased revenue moving forward. With plans to continue building efficiencies and the potential for oil prices to recover in the future, Lowry argues on behalf of the board that Canadian Oil Sands shareholders will be much better positioned in the long run by staying the course.

“Make no mistake, Suncor will try to instill fear in the final hours before its bid expires,” he adds. “But remember, Suncor will only resort to this tactic because it desperately wants what you have: ownership of the largest stake in an irreplaceable, integrated, long-life oil sands project that is poised to return significant value. It is clear a full share of an independent COS is more valuable than a quarter share of Suncor.”

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Indeed, Suncor has already turned up the pressure on Canadian Oil Sands shareholders with a statement of its own, urging shareholders to make a decision and tender their shares by Tuesday or Wednesday in order to ensure processing ahead of the Friday deadline.

“In the ten months since we first approached COS about a friendly business combination, we believe COS' prospects as an independent company in a 'lower for even longer' oil price environment have worsened considerably,” said Steve Williams, Suncor's president and chief executive officer. “We have made a full and fair offer that provides immediate value, a safer haven as compared to COS in an extremely difficult market environment and significant upside when commodity prices finally improve. That said, we can only invest so much time and money in this effort and will feel compelled to move on to other opportunities if we don't see substantial support for our bid on Friday.”

Over the course of the week to come, we will see by shareholder actions which argument has had the stronger effect. 

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Jun 8, 2021

Six issues at the top of tax and finance leaders’ agenda

Tax
Compliance
financeleaders
Deloitte
Kate Birch
4 min
As businesses accelerate their transformation journeys, tax leaders are under increasing pressure to add strategic value. Deloitte reveals six tax trends

New Deloitte research reveals that tax leaders are under increasing pressure to add strategic value as companies accelerate business model transformation, from undergoing digital transformations to rethinking their supply chains or investing in green initiatives.

According to Phil Mills, Deloitte Global Tax & Legal Leader, to “truly deliver value to the business, the tax function needs to rethink its resourcing model and transform its technology infrastructure to create capacity and control costs”.

And the good news, according to Mills, is that tax and business leaders have more options at their disposal to achieve this.

Reflecting the insights of global tax and finance executives at global companies, Deloitte’s Tax Operations in Focus study reveals the six issues at the top of tax and finance leaders’ agenda.

Trend 1: Businesses seek more strategic counsel from tax

Companies are being pushed to develop new digital products and distribution channels and accelerate sustainable transformation and this is taking them into uncharted tax territory. Tax leaders say their teams must have the resources and skills to give deeper advisory support on digital business models (65%), supply chain restructuring (49%) and sustainability (48%) over the next two years. This means redrawing the boundaries of what tax professionals focus on, and accelerating adoption of advanced technologies and lower-cost resourcing models to meet compliance requirements and free up time.

According to Joanne Walker, Group Tax Director, BT Group PLC, "There’s still a heavy compliance load today, but the vision for the future would be that much of that falls away, and tax people become subject matter experts who help program the machine, ensure quality control, and redirect their time to advisory activity.”

Trend 2: Tipping point for resourcing models

Business partnering demands in the tax department are on the rise, but 93% of tax leaders say their department’s budget is remaining flat or falling. To ensure that the tax function can redefine itself as a strategic function at the pace that is required, leaders are choosing to move increasing amounts of compliance and reporting to a combination of shared service centers, finance departments, and outsourcing providers that have invested in best-in-class technology.

Trend 3: Digital tax administration is moving faster than expected

in addition to the rising focus of the corporate tax department partnering with their business counterparts, transformative changes to the way companies share tax information with revenue authorities is also creating an imperative to modernize operations at a faster pace. Nine in 10 (92%) respondents say that shifting revenue authority demands on digital tax administration will have a moderate or high impact on tax operations and resources over the next five years—and several heads of tax said the trend is moving faster than expected.

"It’s really stepped up in the last couple of years," says Anna Elphick, VP Tax, Unilever. "Tax authorities don't just want a faster turnaround for compliance but access into a company’s systems. It's not unreasonable to think that in a much shorter time than we expect, compliance will be about companies reviewing a return that's been drafted by the tax authorities."

Trend 4: Data simplification and lower-cost resourcing are top priorities

Tax leaders said that simplifying data management (53%) and moving to lower-cost resourcing models (51%) must be prioritized if tax is to become more proactive at delivering strategic insights to the business. Many tax teams are ensuring that they have a seat at the table as ERP systems are overhauled, which is paying dividends: 56% of those that have introduced NextGen ERP systems are now highly effective at supporting the business with scenario-modeling insights. Only 35% of those with moderate to low use of NextGen ERP systems said the same.

At Stryker, “we automated the source P&L process for transfer pricing which took a huge burden off of the divisions," says David Furgason, Vice President Tax. "Then we created a transfer price database to deposit and retrieve data so we have limited impact on the divisions. We are moving to a single ERP platform which will help us make take the next step with robotics.”

Trend 5: Skillsets are shifting

Embedding a new data infrastructure and redesigning processes are critical for the future tax vision. Tax leaders are aligned — data skills (45%) and technology process experience (43%) are ‘must have’ skills in a tax department of the future, but more traditional tax specialist knowledge also remains key (40%). The trick to success will be in tax leaders facilitating the way these professionals, with their different backgrounds, can work together collectively to unlock lasting value.

Take Infineon Technologies, which formed a VAT technology and governance group "that has the right knowledge about how to change the system to ensure it generates the right reports", according to Matthias Schubert, Global Head of Tax. "Involving them early was key as we took a greenfield approach, so we could think about what the optimal processes would look like and how more intelligent systems could make an impact 

Trend 6: 2020 brought productivity improvements

Improved productivity (50%) and accelerating shifts to remote working (48%) were cited as the biggest operational benefits to emerge from COVID-19-driven disruption. But, as 78% of leaders now plan to embed either hybrid or fully remote models in the tax function long term, 34% say maintaining productivity benefits is a top concern. And, as leaders think about building their talent pipeline and strengthening advisory skill sets, 47% say they must prioritize new approaches to talent recognition and career development over the next two years, while 36% say new processes for involving tax in business strategy decisions must be established.

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