Suncor president and CEO Steve Williams talks to shareholders before his speech during Suncor Energy's annual general meeting in Edmonton on Tuesday, April 29, 2014.JASON FRANSON/The Canadian Press
Suncor Energy Inc. has reiterated that it has no plans to sweeten its $4.3-billion takeover bid for Canadian Oil Sands Ltd., despite increasing criticism that the offer is unacceptable.
On Tuesday, Canadian Oil Sands investor Seymour Schulich, an outspoken critic of the deal who says he owns a 5-per-cent stake, accused Suncor of trying to "pull a fast one" on shareholders.
"Quite simply, they're offering an unacceptable price for an irreplaceable asset," he wrote in an open letter published as a full-page ad in national newspapers. "I'm not selling at this price and you shouldn't either."
The salvo is the latest in an escalating takeover spat as both sides try to sway shareholders ahead of a Friday deadline.
Suncor chief executive officer Steve Williams again on Tuesday said the hostile offer would lapse on Jan. 8 without a "significant" show of support from Canadian Oil Sands's shareholders, and that there is scant backing for the largest Syncrude Canada Ltd. owner to stay independent.
The all-share deal requires the support of two-thirds of Canadian Oil Sands shareholders.
"If we don't get enough Canadian Oil Sands shareholders to indicate quite clearly to us that we can progress, we will not go ahead with the deal," Mr. Williams said on a conference call. That could trigger a collapse in the target's shares to well under their pre-bid price, he said.
This week, Canadian Oil Sands chairman Don Lowry said there is more value for shareholders in a standalone company after a strategic review failed to drum up a counterbid.
Mr. Williams insisted that opposition to Suncor's offer reflects a minority opinion and expressed confidence the deal will close. "We're getting a very clear message that there is not support for an independent Canadian Oil Sands," he said.
Calgary-based Suncor is seeking to take advantage of oil's collapse to raise its stake in the Syncrude project to 49 per cent from 12 per cent currently. It launched the unsolicited bid last fall, offering 0.25 of one of its shares for each Canadian Oil Sands share.
The target's board has repeatedly urged shareholders to reject the hostile approach while saying it is working to improve performance at the struggling Syncrude facility. Canadian Oil Sands owns 37 per cent of the project.
It is targeting a 20-per-cent reduction in Syncrude costs this year after generating $1.3-billion in savings last year.
However, Mr. Williams said production levels at Syncrude are well below the plant's capacity, with few signs of improvement on the horizon.
At the same time, he said, the price for West Texas intermediate crude is not forecast to rise above $55 (U.S.) a barrel until 2020, making it harder for Canadian Oil Sands to reverse recent cuts to its dividend.