UPDATE 6-Suncor Energy launches $4.3 bln hostile bid for Canadian Oil Sands

Mon Oct 5, 2015 6:19pm EDT
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* Canadian Oil shares surge 55 pct on offer

* Suncor's all-stock offer valued at about C$4.3 billion (Adds investment banker, investor comment, additional comment from Suncor CEO)

By Nia Williams and Amrutha Gayathri

Oct 5 (Reuters) - Suncor Energy Inc launched a hostile bid for Canadian Oil Sands Ltd on Monday, aimed at boosting its stake in the country's biggest synthetic crude project and cementing its position as the country's largest oil producer.

Canadian Oil Sands shares rose 55 percent to C$9.60 on the TSX, well above Suncor's implied offer price, suggesting investors expect a rival bid or sweetened offer to emerge.

A source familiar with the matter, who is not authorized to publicly discuss the bid, said that Canadian Oil Sands is set to reject the offer. Canadian Oil Sands urged shareholders not to act on the all-share offer as it reviews the bid.

Bankers and investors said the bid is unlikely to launch a wave of consolidation in Canada's oil sands industry, which has some of the world's highest operating costs and lowest prices, as many companies are wary of doing deals while the outlook for oil prices remains uncertain.

The offer, valued at about C$4.3 billion ($3.29 billion), comes as slumping oil prices squeeze Canadian oil sands producers.

A successful deal would lift Suncor's stake in the Syncrude oil sands project, the largest single-source producer of oil in Canada, from 12 percent to 48.74 percent. The project produced just over 300,000 barrels per day of light, sweet synthetic crude in August.   Continued...