The Successful Investor Hotline – Friday, October 9, 2015

Article Excerpt

SUNCOR ENERGY INC., $36.67, Toronto symbol SU, has launched a hostile all-stock takeover offer for Canadian Oil Sands (Toronto symbol COS). Canadian Oil Sands’ main asset is its 36.74% stake in the massive Syncrude oil sands development near Fort McMurray, Alberta. It also operates the project. Suncor already owns 12.0% of Syncrude, so buying Canadian Oil Sands would give it effective control, with a 48.74% stake. Equipment failures and other problems have hurt Syncrude’s production in the past few years, and Suncor feels its expertise running similar projects will help Syncrude improve its efficiency and profits. Under the bid, Canadian Oil Sands investors would receive 0.25 of a Suncor share for each share they own. The deal requires at least two-thirds of shareholders to tender their holdings before December 4, 2015. Based on Suncor’s current share price, the offer is worth $4.4 billion. If you include Canadian Oil Sands’ debt, that rises to $6.7 billion, which is equal to 13% of Suncor’s $53.0-billion market…