Friday, June 5, 2009

Shareholders vote on Suncor, Petro-Canada merger

Shareholders in Petro-Canada and Suncor Energy Inc. are set to vote Thursday on the proposed merger of the country's two biggest energy firms.

Separate votes are being held in Calgary.

The marriage of the two heavyweights was announced back in March. Petro-Canada equity holders receive 1.28 shares in the new company for each Petro-Canada share, resulting in existing investors getting a 40 per cent piece of the merged entity. Suncor shareholders would own the remaining 60 per cent of the new firm.

If approved, the union would make the merged company one of the five largest in North America, and the second-largest firm trading on the Toronto Stock Exchange, trailing only Royal Bank.

When the deal was announced, Suncor CEO Rick George said the combination would make for a more efficient player in Canada's oil patch, which will insulate the new Canadian firm from potential foreign takeovers.

Montreal's Letko Brosseau & Associates, a comparatively small investor in Petro-Canada, has come out against the deal. Letko Brosseau claimed the transaction undervalues Petro-Canada and overvalues Suncor.

If shareholders approve the merger, it must still be approved by regulators.

With files from The Canadian Press