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.