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Bridgington's avatar

Interesting perspective. MEG’s been dead money—shareholders should take the SCR deal. It’s a good asset, but poorly run and inefficient. In a $60 WTI world I think a lot of MEG shareholders are unrealistic. Sure, SCR might bump the offer slightly, but there’s no white knight coming. That’s already obvious.

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BrownMarubozu's avatar

I don’t think we have price discovery in SCR so it’s hard to say the offer is too low. If SCR was already in the S&P/TSX Composite I would be more inclined to agree with you.

Ultimately, this offer is attractive to MEG’s biggest shareholders as they get shares in a company with almost double the equity value and can increase their positions whereas their size was limited by the size of MEG. Plus as SCR’s free float slowly expands it will result in flows into MEG resulting in multiple expansion.

Finally, SCR can roll in GFR as well which will another tier one oil sand asset, growth, a bigger float (more index impact) and an NYSE listing.

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