08:15 AM EDT, 05/16/2025 (MT Newswires) -- (Correcting and updating earlier report to omit all references to Pan American Silver ( PAAS ) which recently agreed to buy MAG Silver Corp ( MAG ), not MEG Energy ( MEGEF ). A corrected story follows, referring only to MEG Energy ( MEGEF ) and Strathcona. Adds background details to the Strathcona offer from paragraphs 6 to 10).

MEG Energy ( MEGEF ) on Friday said its board will "consider and evaluate" Strathcona Resources' ( STHRF ) unsolicited offer to acquire all of MEG's issued and outstanding common shares it doesn't already own if and when a related take-over circular arrives.

A MEG statement adds: "No formal offer has been made by Strathcona and MEG shareholders are advised to take no action with respect to any Strathcona offer until the board has had an opportunity to fully review the offer, if and when received, and to make a recommendation as to its merits."

Strathcona will offer to acquire all MEG issued and outstanding common shares it doesn't already own for 0.62 of a Strathcona common share and $4.10 in cash for each MEG share. Based on Strathcona's closing share price on Thursday, the offer values MEG shares at $23.27, a 9.3% premium compared with MEG's closing price on the same day. It values the company at about $5.9 billion.

Strathcona said the offer will not be subject to any financing condition, with the cash component expected to be funded through a bridge financing commitment from a syndicate of lenders, subject to the terms and conditions of such financing. At the time the offer is commenced, Waterous Energy Fund, currently the holder of 79.6% of the Strathcona shares, intends to, through Waterous Energy Fund III, commit to further increase its investment in Strathcona and subscribe for an additional 21.4 million Strathcona shares through the use of subscription receipts.

Upon completion of the offer, Strathcona expects to have approximately 379 million Strathcona shares outstanding and approximately $1.5 billion in net debt. The combined business is expected to be owned approximately 56.5% by existing holders of Strathcona Shares, approximately 37.8% by existing holders of MEG shares and approximately 5.6% by WEF III. WEF is expected to hold a combined approximately 51% ownership position, inclusive of its existing Strathcona Shares and those expected to be issued to WEF III pursuant to the WEF III Equity Investment.

As background to the offer, during the first and second quarters of 2025, Strathcona acquired approximately 23.4 million MEG Shares through open market purchases, representing approximately 9.20% of the issued and outstanding MEG Shares as of May 5, 2025 or approximately 9.98% assuming completion in full of MEG's current normal course issuer bid.

On April 28, 2025, Strathcona made a formal written combination proposal to the board of directors of MEG, with the same consideration as the Offer. On May 13, 2025, the chairman of the MEG Board responded and indicated that the MEG Board was not interested in pursuing a combination with Strathcona.

Strathcona said it respects the MEG Board's right to dismiss any offer made for MEG, and it has no reason to believe that its decision to dismiss Strathcona's proposal was not made in good faith based on its view of what is best for MEG Shareholders. However, Strathcona believes the benefits of a combination of Strathcona and MEG are significant enough that MEG Shareholders should have the opportunity to decide for themselves.

Strathcona expects to file the formal offer to purchase and take over bid circular for the offer in the next two weeks.

Its statement reads: "Strathcona remains ready and willing to engage with the MEG Board regarding a strategic combination. To the extent the MEG Board determines it to be prudent, as the second largest MEG Shareholder, Strathcona would also support a strategic alternatives process for MEG to determine if a superior transaction is available. Strathcona would be willing to participate constructively and in good faith in such a process, including signing a mutual confidentiality agreement to share non-public information, provided it is not required to sign a standstill agreement."