10:39 AM EDT, 09/08/2025 (MT Newswires) -- (Adds share price update and National Bank commentary in the third paragraph)

Strathcona Resources ( STHRF ) on Monday increased its offer to acquire all of MEG Energy's ( MEGEF ) common shares it does not already own for 0.80 of a Strathcona common share per MEG share. Its previous offer was for 0.62 of a Strathcona share and $4.10 in cash per MEG share.

The amended offer values MEG at C$30.86 per share and represents an 11% premium to the rival agreement entered into by MEG and Cenovus Energy ( CVE ). MEG in August struck a deal with Cenovus Energy ( CVE ) , under which Cenovus moved to acquire all of MEG's common shares in a deal that valued MEG at $27.25 per share, currently valued at $27.79 per MEG share. Strathcona said its amended offer reflects a 10% increase to its original offer, valued at $28.02 per MEG share as of September 5, 2025.

Strathcona, which was down 2% at last look, has kept its outperform rating and $42 price target at National Bank of Canada following the news. The bank based the target price on an unchanged 2026e EV/DACF multiple of 6.0x.

Interestingly, National Bank said, the previously announced special distribution of $2.142 billion looks to provide further value support for MEG shareholders through a return of capital of $5.22 per share on a pro forma basis. So effectively, the bank added, a current MEG shareholder would potentially receive $35.96 for each share.

National Bank said it was "not too surprised" on Strathcona's sweetened bid for MEG, as the company strongly believes in the pro forma business and the associated synergies to be captured over the long term. It added: "This newly structured offer for MEG provides shareholders with more equity exposure across a pure play WCS producer, which we think is compelling for MEG shareholders."

"Importantly," National Bank also noted, "and as we have published in our recent CVE Upgrade to Outperform note, the MEG deal also provides CVE with meaningful synergies, which drove part of the upgrade decision. We have published our synergies around the CVE pro forma business in that report, but

also highlight Strathcona expects to capture more than $200 million in annual opportunities go forward."

For its part, Strathcona said Waterous Energy Fund, its largest shareholder, has a long-term view of the business and has no plans to sell any of its Strathcona shares, "contrary to claims by the MEG board of directors." The company also said the deal between MEG and Cenovus was "highly lopsided," which was reflected in the market reaction in the days following the announcement.

"This extraordinary outcome was the product of a MEG board of directors which has amongst the lowest share ownership in the Canadian oil and gas sector and a broken sale process which clearly generated little interest from other industry players and excluded Strathcona," Strathcona said.

Price: 37.70, Change: -0.72, Percent Change: -1.87