By Lisa Kerner
Charlotte, N.C., March 23 - Suncor Energy Inc. and Petro-Canada agreed to combine in a plan of arrangement that gives each company's shareholders a stake in the merged entity.
Petro-Canada common shareholders will receive 1.28 common shares of the combined company for each common share of Petro-Canada they own. Suncor common shareholders will receive one common share of the merged company for each common share of Suncor they own, the companies said.
A termination fee of C$300 million payable to Suncor or Petro-Canada is included in the arrangement agreement.
Suncor and Petro-Canada said their shareholders will vote on the plan in late May or early June.
The transaction is expected to close in the third quarter, after which Suncor's existing shareholders will own approximately 60% and Petro-Canada shareholders will own approximately 40% of the merged company.
According to the companies, the combined entity will operate corporately and trade under the Suncor name while maintaining its brand presence of Petro-Canada in refined products.
"This merger creates a made-in-Canada energy leader with the assets, cost structure and financial strength to compete globally," Suncor president and chief executive officer Rick George said in a joint news release.
George will become president and CEO of the merged company.
Eight members of Suncor's current board and four members of Petro-Canada's board will form the board of directors of the combined company, which will be led by Suncor chairman John Ferguson.
The combined company will trade on the Toronto and New York stock exchanges under the symbol "SU" once the merger is completed.
CIBC World Markets and Morgan Stanley are advising Suncor, and Petro-Canada is being advised by RBC Capital Markets and Deutsche Bank.
Suncor is an integrated energy company based in Calgary, Alta.
Petro-Canada is an oil and gas company also located in Calgary.
| Acquirer: | Suncor Energy Inc.
|
| Target: | Petro-Canada
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| Announcement date: | March 23
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| Price per share: | 1.28 common shares of merged company for each Petro-Canada share, 1 common share of merged company for each Suncor share
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| Expected closing: | Third quarter of 2009
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| Termination Fee: | C$300 million
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| Stock price of acquirer: | NYSE: SU: $25.29 on March 20
|
| Stock price of target: | Nasdaq: NYSE: PCZ: $24.01 on March 20
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