09:15 AM EDT, 08/22/2025 (MT Newswires) -- Cenovus Energy ( CVE ) has agreed to acquire fellow Canadian oil sands producer MEG Energy in a cash-and-stock deal worth about 7.9 billion Canadian dollars ($5.68 billion), including debt, the companies said Friday.

Shareholders of MEG Energy will have the option to receive CA$27.25 per share in cash or 1.325 of Cenovus shares, representing a mix of 75% cash and 25% of the latter's stock, according to the companies. Cenovus will assume CA$900 million of net debt and lease liabilities under the terms of the agreement, according to a presentation.

The deal, which requires approval from regulators and clearance from MEG Energy's investors, is expected to be completed in the fourth quarter. Cenovus' New York stock exchange-listed shares rose 2.2% in the most recent premarket activity.

"This transaction represents a unique opportunity to acquire approximately 110,000 barrels per day of production within some of the highest quality, longest-life oil sands resource in the basin," Cenovus Chief Executive Jon McKenzie said in a statement. "The magnitude of synergies that we have identified makes this a compelling value creation opportunity for Cenovus shareholders."

Cenovus estimates the acquisition to be immediately accretive to its adjusted funds flow and free funds flow on per-share bases. The company expects to generate about CA$150 million in short-term annual synergies, which are expected to increase to more than CA$400 million per year in 2028 and beyond.

Cenovus said it has obtained financing through a CA$2.7 billion term loan and a CA$2.5 billion bridge loan, which will be used to fund the cash part of the deal. Pro forma net debt is expected to be around CA$10.8 billion, the company added.

"This strategic transaction with Cenovus accelerates and de-risks the value embedded in our compelling standalone plan," MEG Energy CEO Darlene Gates said in a separate statement. "It became clear that bringing together MEG and Cenovus's Christina Lake assets is a unique opportunity for synergy realization that will maximize the value of the resource for the benefit of its stakeholders."

MEG Energy said the deal with Cenovus represents a superior offer to the unsolicited acquisition proposal it received from Canadian oil producer Strathcona Resources in May.