XML FeedsAn Acquisition by Suncor Protects a Canadian Identity in Oil Sands
By CostBenefit on Apr 6, 2009 | In General, Air, Energy, Climate Change GHG Carbon CO2, Companies,CSR,Business,Finance, Newspaper/Mag/TV/Media Story, Canada, Travel Cost Method, Costs and Benefits | Send feedback »
Link: http://www.nytimes.com/2009/03/24/business/worldbusiness/24suncor.html?ref=business
[In March], Suncor Energy confirmed that it would acquire Petro-Canada, forming a company with a combined market capitalization of about 43 billion Canadian dollars.
Suncor pioneered the development of Alberta’s oil sands, which has made Canada the largest source of imported oil for the United States. Petro-Canada, which was founded by the Canadian government in 1975, is also a major oil sands developer, although its experience in the environmentally controversial projects has not been uniformly successful.
Reflecting the current market constraints, the takeover is entirely share-based. Petro-Canada shareholders will receive 1.28 common shares of the expanded company for each share of Petro-Canada, while Suncor shareholders will receive new shares on a one-for-one basis. The deal values Petro-Canada at about $15 billion, and Suncor shareholders will hold 60 percent of the new company.
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The oil in those projects is trapped in tarlike bitumen, which is mixed with sand and clay. Andrew J. Leach, a business professor at the University of Alberta in Edmonton, said that to keep large plants running at full capacity to separate that oil and upgrade it into synthetic crude, Suncor buys substantial volumes of bitumen from Petro-Canada.
In the recent collapse in oil prices, both companies have been faced with questions about how they will continue to invest in their oil sands projects, which are exceptionally capital-intensive. Professor Leach expects that the focus will now be on Suncor’s properties rather than Petro-Canada’s, which have been criticized for cost overruns.
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Some analysts viewed the merger as a defensive maneuver by Suncor to avoid being acquired at a time of depressed share prices.
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While the merged company will operate under Suncor’s name, the Petro-Canada gas stations will use their familiar brand..
The merged company will continue to be covered by legislation that governed Petro-Canada’s privatization. Among other things, no individual or group of shareholders can own more than 20 percent of the company.
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The merger will also be reviewed by competition officials....
By Ian Austen
FOR FULL STORY GO TO:
http://www.nytimes.com/2009/03/24/business/worldbusiness/24suncor.html?ref=business
The New York Times www.NYTimes.com
Published: March 23, 2009
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