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The Suncor Energy sign is seen outside Suncor's head office in Calgary, Alberta, October 2, 2009.Todd Korol/Reuters

The gap between the price of Canadian Oil Sands Ltd. shares and Suncor Energy Inc.'s hostile offer for the company has narrowed, suggesting some investors may be betting a friendly deal could yet be hammered out.

Canadian Oil Sands surged 5 per cent on Thursday, putting the stock less than 6 per cent below the implied value of Suncor's as-yet unsuccessful $4.3-billion all-stock bid. That compares with more than 11 per cent on Friday, when the suitor extended its offer to Jan. 27 after failing to secure enough shares to its bid.

Suncor has not disclosed the percentage of Canadian Oil Sands shares that were tendered. To be successful, it required two-thirds of those outstanding.

Suncor is offering one-quarter of one of its shares for each COS share, a fraction the target's chief executive has said undervalues his company's business and prospects.

Adding to speculation on Thursday, Alister Cowan, Suncor's chief financial officer, backed out of a presentation he had been scheduled to make to investors in Toronto.

When asked about the sudden change in the agenda, a Suncor spokeswoman said the company has cancelled all its marketing appearances in the coming weeks to focus on the COS bid.

She declined to comment on whether any negotiations between the two sides had taken place. A spokesman for COS, who until last weekend had said there had been no discussions between the two companies since last April, also declined to comment.

"They should definitely be looking at all their options to get it done friendly," said Samir Kayande, analyst at RS Energy Group in Calgary. "Both sides should try and figure out a way to end the pain. In every scenario, it seems to me that a negotiated settlement would be superior to battling it out."

The new bid deadline is approaching as crude oil and energy stocks have come under severe pressure. Benchmark West Texas intermediate oil has fallen 30 per cent to a 12-year low since Suncor announced its bid in early October.

COS is the largest interest holder in the Syncrude Canada Ltd. oil sands project with a 37-per-cent stake. Suncor has a 12-per-cent interest in the venture, which has struggled with reliability problems and, lately, the collapse in crude oil prices.

Suncor has argued that investors are better off holding its shares, as its deep pockets and diverse assets provide some protection from the oil shock. COS has said its shareholders will reap major rewards when crude recovers, as it is a "pure play" that follows the commodity price closely.

Billionaire investor Seymour Schulich, who says he owns roughly 5 per cent of COS, has pressed Suncor to issue warrants as a way of enabling COS shareholders to benefit from a rise in crude oil prices.

However, Suncor CEO Steve Williams has played down the idea of a sweetened bid, citing oil's free fall since last spring and faltering operations at the Syncrude plant.

"So I think you add those together with the clear dissatisfaction with the board and management of COS now, and I think our bid is full and fair and I think the market is telling us that," he said last week.

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 28/03/24 1:37pm EDT.

SymbolName% changeLast
SU-N
Suncor Energy Inc
+0.9%36.81
SU-T
Suncor Energy Inc
+0.89%49.94

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