Marine Link
Sunday, November 18, 2018

MEG Energy Rejects Husky's Bid

Maritime Activity Reports, Inc.

October 18, 2018

Image: MEG

Image: MEG

MEG Energy announced its Board of Directors has unanimously determined that Husky Energy's unsolicited bid to acquire MEG significantly undervalues the common shares of MEG and is NOT in the best interests of MEG or the holders of Common Shares.

On October 2, 2018, Husky made a formal offer to acquire all of the issued and outstanding Common Shares, at the election of the MEG Shareholder, for (i) $11.00 in cash or (ii) 0.485 of a common share of Husky for each Common Share, subject to a maximum aggregate cash consideration of $1 billion and a maximum aggregate number of Husky Shares of approximately 107 million.

The Husky Offer must remain open until at least January 16, 2019 unless otherwise extended, accelerated or withdrawn in accordance with its terms.

In June, the Board completed a comprehensive strategic review of MEG's business plan, operations and financial condition and considered alternatives available to support MEG's corporate strategy and enhance MEG Shareholder value.

In August, the Board appointed a new Chief Executive Officer, Derek Evans, to execute upon MEG's business plan, pursuant to which the Board and management expect to generate substantial free cash flow for MEG over the next several years.

Upon receipt of the Husky Offer, the Board, operating through a Special Committee, engaged with financial and legal advisors to diligently review the Husky Offer. The Board has unanimously concluded that the Husky Offer significantly undervalues the Common Shares, is not in the best interests of MEG or MEG Shareholders and recommends that MEG Shareholders REJECT the Husky Offer and NOT tender their Common Shares.

"The Husky Offer significantly undervalues MEG's assets, technology, expertise and business prospects.  Over the last few years, there has been a substantial transformation of our business, culminating in the appointment of a top-rated CEO and the strengthening of our management team. Since the start of 2017, the Company has successfully sold non-core assets, reduced debt and significantly extended our remaining debt maturities.  MEG is now at an inflection point with a low risk business plan and a clear line of sight to significant free cash flow generation commencing in 2019," said Jeffrey J. McCaig, Chairman of the Board.

The Board noted that MEG's stand-alone plan is worth substantially more than the value proposed to be delivered by Husky in the Husky offer. The timing of the Husky Offer is opportunistic, it said.

MEG also notes that the Board fully analyzed, vetted and provided feedback to Husky about a financially identical non-binding proposal that Husky made privately to MEG on August 8th.

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