White knight rescues Ranger Oil

Canadian Natural Resources Ltd., a senior producer with close ties to Calgary financier Murray Edwards, has struck a deal to acquire Ranger Oil Ltd. for $1.04-billion in a takeover that rescues Ranger from a hostile bidder.

Yesterday's friendly offer by Canadian Natural is 10 per cent higher than an unsolicited bid launched on April 6 by Petrobank Energy and Resources Ltd.

"Murray was a real gentleman and a tough bargainer," said Frederick Dyment, Ranger's president and chief executive officer. "He was looking to go international, and I think the fit came together at the right time."

By playing the white knight, Calgary-based Canadian Natural is poised to make its first foray into the international arena. Ranger, founded 50 years ago, made a name for itself as an independent Canadian company doing business abroad, notably from producing oil and gas in the North Sea.

Ranger's board of directors examined several options and concluded that Canadian Natural's offer "maximizes value for Ranger shareholders," Mr. Dyment said.

Mr. Edwards, who is a Canadian Natural director and a large shareholder, joined forces with Allan Markin in 1988 to help rescue the company from the brink of collapse.

"This is a logical way for us to grow internationally," said Mr. Markin, now Canadian Natural's chairman.

The offers by Canadian Natural and Petrobank are both cash-and-share bids. However, Ranger's institutional investors don't like the paper offered by Petrobank, a little-known junior producer that's a 10th the size of Ranger.

By contrast, Canadian Natural has a stock market value of $5.2-billion, making it one of Canada's largest oil and gas companies. As well, Mr. Markin and Mr. Edwards are well known in Calgary's business circles -- both men are part of a local group that owns the National Hockey League's Calgary Flames.

Ranger has assets in Western Canada, the North Sea, the Gulf of Mexico and offshore Angola. The Calgary-based producer has $525-million in debt.

Steve Laut, Canadian Natural's senior vice-president of operations, said Ranger's North Sea holdings would add another growth segment to Canadian Natural's strengths in Western Canadian natural gas, heavy oil and oil sands.

Canadian Natural -- widely known in the oil patch by its stock symbol CNQ -- is offering $8.25 a share in cash for Ranger, with the cash component capped at $650-million. Or, if the cap is met, Ranger shareholders can receive $4.95 a share in cash and 0.068 of a Canadian Natural share for every Ranger share. Or, they can take an all-share option of 0.175 of a Canadian Natural share for every Ranger share.

Calgary-based Petrobank is offering $2.50 a share in cash and two Petrobank shares for each of Ranger's 126 million shares outstanding. Petrobank had hoped to swing a side deal to sell $262-million in Ranger gas assets to Calgary-based Alberta Energy Co. Ltd.

Petrobank's takeover battle with Ranger over the past 10 weeks featured a series of ugly clashes, including accusations of insider trading on both sides. Petrobank management, led by CEO John Wright, wanted to oust Ranger executives from their jobs for letting the company's stock price languish.

"It's a brilliant deal for CNQ," said Mr. Wright, who added that Canadian Natural has positioned itself for longer-term growth.

Ranger has stopped soliciting rival bids and agreed to pay a breakup fee of $45.9-million to Canadian Natural if the deal falls through.

While Petrobank and its affiliates own about 5.5 per cent of Ranger's shares, Mr. Wright said he isn't impressed with Canadian Natural's offer.

He complained that Ranger refused to let Petrobank review internal financial and operating data, preventing his company from sweetening its bid.

Canadian Natural shares dipped $2.25 to close at $46 yesterday on the Toronto Stock Exchange. Ranger fell 30 cents to $8.05, while Petrobank gained 2 cents to $2.07.