Cenovus Energy Acquires Husky Energy in All-Stock Transaction

Updated 8 months 1 week ago

Cenovus has entered into a definitive agreement in October 2020 to acquire Husky Energy with Husky shareholders receiving 0.7845 of a Cenovus share and 0.0651 of a share purchase warrant in exchange for each Husky share. The company anticipates to save CAD 600 million annually in corporate and operating costs and CAD 600 million from reduced capital allocation to be realized almost entirely in the first year following the combination.

The combined company will be the third largest Canadian with about 750,000 barrels of oil equivalent per day. It will be the second largest Canadian-based refiner and upgrader with total North American upgrading and refining capacity of approximately 660,000 barrels per day including 350,000 barrels per day of heavy oil conversion capacity. The company estimates a free funds flow breakeven WTI price of $36 per barrel. Alex Pourbaix will serve as CEO of the combined company; Jeff Hart will serve as CFO; Jon McKenzie will serve as the COO; and Keith MacPhail will serve as independent board chair. The rest of the executive team was announced in November 2020.

Both Cenovus and Husky directors have unanimously approved the deal with closing expected in the first quarter of 2021, subject to shareholder and regulatory approvals. CK Hutchison, which holds a controlling stake in Husky, has entered into irrevocable voting support agreements to approve the transaction. RBC Capital Markets and TD Securities advised Cenovus with Goldman Sachs and CIBC Capital Markets advising Husky.

Alex Pourbaix, Cenovus President & CEO

The diverse portfolio will enable us to deliver stable cash flow through price cycles, while focusing capital on the highest-return assets and opportunities. The combined company will also have an efficient cost structure and ample liquidity. All of this supports strong credit metrics, accelerated deleveraging and an enhanced ability for return of capital to shareholders.