Eric Nuttall of Ninepoint Partners has sold his entire stake in MEG Energy ahead of a key shareholder vote on a takeover offer by Cenovus Energy, In the Money with Amber Kanwar has learned. Nuttall was the seventh largest shareholder, owning 6 million shares according to holder data on Bloomberg. “I see significant deal risk in both deals falling apart and as a result there is non-insignificant risk in holding MEG stock today,” Nuttall said in an email. He says he sold all his shares in the $28/share range.
MEG Energy was put in play when Strathcona Resources announced a hostile takeover bid in May. MEG Energy rejected the offer and announced a strategic review. The Executive Chair of Strathcona Resources told In the Money with Amber Kanwar that they have never been invited into that process. In August, MEG announced it had agreed to a takeover by Cenovus in a largely cash deal that was lower than Strathcona’s offer. In September, Strathcona increased its bid by 10% putting an all-stock deal on the table.
“I like neither deal,” Nuttall says, “both undervalue the long-term opportunity in MEG’s asset base and the compounding effect of meaningful share buybacks over time.” In the last week, proxy advisory firms ISS and Glass Lewis have recommended shareholders tender to the Cenovus offer. Yesterday, top shareholder Cole Smead revealed he would be voting against the Cenovus offer in a post on X. “In case anyone is wondering, we will be voting against the CVE offer for our MEG shares,” said Smead who owns about 1 million shares and is the 19th biggest shareholder.
“If both get voted down I would expect the stock to initially selloff as merger/arb guys exit, and I would anticipate aggressively buying back my position on that weakness,” said Nuttall.
The deadline for MEG shareholders to vote on the Cenovus offer is October 7th.
Relevant episodes:
Strathcona Hit $4B Faster Than Any Canadian Company—Adam Waterous Wants MEG Next
Bidding War in the Oil Patch: Why Adam Waterous Isn’t Backing Down
Episode 18: Why American Investor Cole Smead Loves Canadian Oil Stocks
