Sept 15 (Reuters) - Canadian oil sands producer MEG

Energy ( MEGEF ) on Monday urged shareholders to reject the

sweetened takeover bid from its majority stakeholder Strathcona

Resources ( STHRF ), and reaffirmed support for sale to Cenovus

Energy ( CVE ).

"The revised Strathcona offer remains fundamentally

unattractive," said James McFarland, chair of MEG's board,

citing exposure to inferior assets, an overvalued Strathcona

share price and governance risks.

The battle for Canada's last major pure-play oil sands

company highlights a consolidation, leaving the sector dominated

by few big Canadian players following the pullback of foreign

firms over the past decade.

MEG's Christina Lake oil sands project has become a prized

asset, with its long reserve life, low operating costs and

significant potential for production growth, making it one of

the few large-scale expansion opportunities.

The takeover saga began in May when Strathcona launched a

C$5.93 billion ($4.29 billion) hostile bid for MEG Energy ( MEGEF ).

However, Cenovus countered with a C$7.9 billion cash-and-stock

agreement to acquire MEG.

Since then, Strathcona has raised its stake in MEG to 14.2%,

aiming to vote against the Cenovus deal, and earlier this month

sweetened its original offer to C$30.86 per share, compared with

Cenovus' nearly C$28 bid.

"The Special Distribution described in the Revised

Strathcona Offer results in a weaker balance sheet and increased

financial risk for the combined company compared to the Initial

Strathcona Offer", the company said in a statement.

Earlier this month, Strathcona announced plans for a C$2.14

billion special distribution to shareholders in the fourth

quarter, equating to about C$5.22 per share if their sweetened

bid is successful.

Cenovus CEO Jon McKenzie told Bloomberg News last week the

company does not plan to raise its offer for MEG despite

Strathcona's higher bid.

MEG shareholders are expected to vote on the Cenovus deal on

October 9.

Strathcona Resources ( STHRF ) did not immediately respond to a

Reuters request for comment.

($1 = 1.3822 Canadian dollars)