Calgary, Canada, June 16: Canadian Natural Resources Ltd. made a white-knight bid to acquire Ranger Oil Ltd. for cash and stock valued at about 1.08 billion Canadian dollars (US$735.7 million). Ranger's board agreed to the deal, which still needs approval of two-thirds of the company's shareholders. The agreement between the two Calgary companies threw cold water on a lesser takeover bid for Ranger by much smaller Petrobank Energy & Resources Ltd., also of Calgary. Ranger had fought the offer, which is set to expire next Monday.Petrobank said earlier this week that it wouldn't sweeten its bid for Ranger unless allowed access to confidential data on Ranger's assets that other potential suitors had examined. Ranger said it now has closed its data room. Canadian Natural's proposed acquisition of Ranger would create Canada's latest international oil concern. By acquiring Ranger, which has oil and natural gas assets primarily in Canada, the U.S., the North Sea and offshore West Africa, Canadian Natural would gain exposure to "important" long-term opportunities for international growth, said Scott Inglis, an analyst with FirstEnergy Capital Corp., Calgary. Previously, Canadian Natural, a fast-expanding oil and natural gas producer, had operated only in Canada, where opportunities are more limited, he said.
For Canadian Natural, acquiring Ranger also would cap a string of acquisitions that have contributed to its emergence as one of Canada's biggest and lowest-cost producers of heavy crude. Last year it purchased C$1.06 billion of Canadian oil assets from Britain's BP Amoco PLC and spent an additional C$216 million to buy the western Canadian assets of bankrupt Blue Range Resource Corp., also of Calgary.
Canadian Natural's offer would give Ranger shareholders either C$8.25 in cash or 0.175 of a Canadian Natural share for each Ranger common share. The offer is subject to a maximum cash component of C$650 million and to a maximum stock component of 10 million Canadian Natural shares. Canadian Natural also offered to assume C$525 million of Ranger debt. Ranger agreed to pay a C$45.9 million break-up fee under certain conditions if Canadian Natural's bid isn't successful and agreed not to solicit further offers.
Following news of the deal, Canadian Natural's stock fell nearly 5% on the Toronto Stock Exchange to close at C$46, down C$2.25. But FirstEnergy's Mr. Inglis predicted the deal would add 15% to Canadian Natural's cash flow next year. Canadian Natural has "a track-record of making money from messy deals" and will exploit Ranger's assets more aggressively than current management, Mr. Inglis said. Ranger put itself on the auction block shortly after receiving Petrobank's unsolicited offer of C$7.50 in cash or three Petrobank common shares for each Ranger share.
-- (The Wall Street Journal)
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