Cenovus Energy has agreed to buy Husky Energy in an all-stock deal valued at CAN$3.8 billion (US$2.9 billion). The deal makes Cenovus an integrated producer with refineries in Canada and the US, adding to their existing half-ownerships in two US refineries. Acquiring refineries, pipelines and storage offered a solution to Canada’s often-congested pipelines, which have usually created price discounts.
After the deal closes, Cenovus shareholders would own 61% of the combined entity, with Husky shareholders controlling the rest. Hong Kong tycoon Li Ka-shing-controlled Hutchison Whampoa would hold a 15.7% stake in the new company. Hutchison Whampoa is the biggest shareholder of Husky currently, with a 40.2% stake.
Cenovus’ deal for Husky is valued at CAN$23.6 billion, including debt, the companies said. It is the biggest Canadian oil and gas deal in nearly four years, based on enterprise value. The combined company is expected to generate annual synergies of CAN$1.2 billion and will operate as Cenovus Energy Inc with headquarters in Alberta.
Pourbaix will serve as chief executive of the merged company with Jeff Hart, currently Husky’s finance chief, becoming chief financial officer. Cenovus said the combined company will be able to produce 750 000 boe/d.
The transaction has been approved by the boards of both Cenovus and Husky and is expected to close in 1Q21, the companies said.