Cenovus Energy Inc. ( CVE ) said Thursday it will acquire MEG Energy Corp. ( MEGEF ) in a cash-and-stock deal valued at $7.9 billion, including debt, creating one of the largest players in Canada’s oil sands sector.

Cenovus will pay MEG shareholders $27.25 per share, with 75% in cash and 25% in Cenovus stock. Investors can choose an all-cash or all-stock payout, subject to caps on the total amount of each available. On a pro-rated basis, holders will receive about $20.44 in cash and 0.33 Cenovus shares per MEG Energy ( MEGEF ) share.

The combined company will oversee more than 720,000 barrels a day of oil sands production, consolidating assets at Christina Lake. Cenovus said the merger enhances efficiency and provides one of the lowest steam-to-oil ratios in the sector.

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The company projected $150 million in annual synergies in the near term, growing to more than $400 million by 2028. Executives said the deal will be immediately accretive to cash flow and preserve its investment-grade credit profile. Pro forma net debt is expected at $10.8 billion, less than one times adjusted funds flow.

“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,” said Jon McKenzie, Cenovus president and CEO. He added that MEG Energy ( MEGEF ) had “done a fantastic job developing these assets.”

Financing and Shareholder Returns

The cash portion will be funded through a $2.7 billion term loan and a $2.5 billion bridge facility underwritten by Canadian Imperial Bank of Commerce and JPMorgan Chase. Cenovus said it will update its shareholder returns framework, increasing capital returns as net debt falls toward its $4 billion long-term target.

Boards of both companies have unanimously approved the deal, which is expected to close in the fourth quarter of 2025 pending shareholder and regulatory approval.

CVE held cash and cash equivalents of 2.563 billion Canadian dollars as of June 30, 2025.

Exchange-traded funds with exposure to the sector include the Energy Select Sector SPDR Fund ( XLE ) and the iShares U.S. Energy ETF ( IYE ) .

Price Action: CVE shares are trading higher by 0.85% to $15.34 premarket at last check Friday.

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