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Suncor Gets Canadian Oil Sands' Investor Nod for Buyout

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Suncor Energy Inc.SU − Canada's largest energy firm - now has approval from 72.9% of Canadian Oil Sands Ltd shareholders to take over the latter.

It is to be noted that shareholders of Canadian Oil Sands who could not tender their shares due to lack of time will now get a chance to do so as the offer has been extended by Suncor to Feb 22, 2016. All the tendered shares of Canadian Oil Sands will likely be taken up by Suncor.

Importantly, as per the terms of the Oct 5, 2015 offer and the amended offer on Jan 22, 2016, Canadian Oil Sands shareholders will be paid 0.28 Suncor share for every share of Canadian Oil Sand.

Notably, Canadian Oil Sands shareholders, who will be approving the C$4.24 billion bid within Feb 22, 2016, are expected to get Suncor's dividend of 29 Canadian cents per share. The dividend is anticipated to be paid by Mar 25, 2016 to Suncor shareholders of record as of Mar 4, 2016. However, the Canadian Oil Sands shareholders who fail to tender within the mentioned date will not be eligible for the first-quarter dividend from either Canadian Oil Sands - as the company shelved its dividend − or Suncor.

Last month, after days of negotiation, the two companies finally signed a friendly accord under which Suncor consented to raise its bid to C$4.24 billion from the prior offer of C$3.78 billion.

Let's go to Suncor's motivation behind acquiring Canadian Oil Sands. It is common knowledge that Canadian Oil Sands possesses the largest stake of 36.7% in the Syncrude oil-sands mining consortium. Now, Suncor with a 12% ownership in the consortium is trying to snatch this position from Canadian Oil Sands and for that, acquiring the latter is the easiest way out. The world's largest publicly traded oil company, Exxon Mobil Corporation XOM has a 25% stake in the consortium.

Calgary, Alberta-based Suncor is an integrated energy company of Canada. Suncor currently carries a Zacks Rank #4 (Sell), implying that it will underperform the broader U.S. equity market over the next one to three months.

Meanwhile, some better-ranked players in the energy sector are Tesoro Corporation TSO and Valero Energy Corporation VLO . Both stocks carry a Zacks Rank #2 (Buy).

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VALERO ENERGY (VLO): Free Stock Analysis Report

TESORO CORP (TSO): Free Stock Analysis Report

SUNCOR ENERGY (SU): Free Stock Analysis Report

EXXON MOBIL CRP (XOM): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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