Markets expected to take measure of Cenovus-Husky deal as earnings season begins

Calgary oilpatch investors are expected to take stock of a mega-merger between oilsands heavyweights Cenovus Energy Inc. and Husky Energy Inc. as stock markets open this morning.

The surprise deal announced Sunday will see Husky shareholders receive 0.7845 of a Cenovus share plus 0.0651 of a Cenovus share purchase warrant in exchange for each Husky common share.

The companies say the price, which values Husky at $ 3.8 billion, represents a 21 per cent premium, excluding warrants, to Husky’s five-day volume-weighted average price per share on Friday, but Cenovus CEO Alex Pourbaix said Sunday that’s more a result of recent stock market volatility than intent.

Cenovus shareholders would own about 61 per cent of the combined company and Husky shareholders about 39 per cent.

The transaction must be approved by at least two-thirds of Husky’s shareholders but Hong Kong billionaire Li Ka-Shing controls 70 per cent of Husky’s shares and has agreed to vote them in favour of the deal.

Sunday’s announcement comes just as Calgary’s oilsands companies are about to start rolling out third-quarter financial results, with Suncor Energy Inc. set to report Wednesday and both Cenovus and Husky scheduled to report on Thursday.

This report by The Canadian Press was first published Oct. 26, 2020.

Companies in this story: (TSX:CVE, TSX:HSE, TSX:SU)

TORONTO STAR