Canada’s Cenovus Energy to buy Husky Energy for $18 billion

FILE PHOTO: Pipelines carrying steam to wellheads and heavy oil back to the processing plant line the roads and boreal forest at the Cenovus Energy Christina Lake Steam-Assisted Gravity Drainage (SAGD) project 120 km (74 miles) south of Fort McMurray, Alberta, August 15, 2013. REUTERS/Todd Korol

(Reuters) – Canadian oil and gas producer Cenovus Energy Inc will buy peer Husky Energy Inc in an all-stock transaction valued at C$23.6 billion ($17.97 billion), inclusive of debt, the companies said in a joint statement on Sunday.

The deal is the latest sign of consolidation in the energy industry following the collapse of oil prices.

Earlier this month Concho Resources Inc agreed to being taken over by ConocoPhillips for $9.7 billion. That followed Chevron Corp’s $4.2 billion purchase of Noble Energy.

Cenovus’ deal for Husky implies a transaction equity value for Husky of about C$3.8 billion and a transaction enterprise value of about C$10.2 billion, according to the statement.

Husky shareholders will receive 0.7845 of a Cenovus share and 0.0651 of a Cenovus share purchase warrant in exchange for each Husky common share, according to the statement.

The combined company is expected to generate annual synergies of C$1.2 billion and will operate as Cenovus Energy Inc with headquarters in Alberta, Canada, the statement said.

Cenovus CEO Alex Pourbaix will serve as chief executive of the merged company with Jeff Hart, currently Husky’s finance chief, becoming chief financial officer.

Cenovus said the combined company will be the third largest Canadian oil and natural gas producer with production of 750,000 barrels of oil equivalent per day of low-cost oil and natural gas.

The transaction has been unanimously approved by the boards of directors of Cenovus and Husky and is expected to close in the first quarter of 2021, the companies said.

Reporting by Ann Maria Shibu in Bengaluru; Editing by Susan Fenton