Suncor to Buy Petro-Canada in C$19.3 Billion Takeover

Consolidation in global energy sector now gathers momentum. Suncor Energy Inc., the world’s second-largest oil-sands producer, agreed to buy Petro-Canada for C$19.3 billion ($15.6 billion) in a record takeover that will create the biggest Canadian energy company. Owners of Petro-Canada will get 1.28 shares of the combined company for each of their shares, the Calgary-based oil producers said today in a statement. The transaction values Petro-Canada at C$39.55 a share, 33 percent higher than its March 20 closing price.

The deal is the biggest in history for a Canadian oil company and is the industry’s largest worldwide since January 2007, according to Bloomberg data. It will yield expense savings and help Suncor shoulder high-cost oil-sands projects in northern Alberta after crude prices tumbled more than $100 a barrel from last year’s all-time high.

"It’s a good opportunity for Suncor to snap up some good assets at fairly depressed prices," said Greg Smith, managing director at investment adviser Fat Prophets U.K. Ltd. in London.
"Oil sands are the legitimate solution to the long-term energy problem, but it’s a lot more costly to get the oil out of the ground."

Petro-Canada produced about 409,000 barrels of oil equivalent a day in the fourth quarter, 46 percent more than Suncor’s total, from its operations in Canada, the U.S., the North Sea and Africa.

The Ontario Teachers’ Pension Plan increased its stake in Petro-Canada to 3.3 percent in the fourth quarter and said it would push for ways to boost the share price after the stock lost half its value last year. The stock underperformed the Standard & Poor’s/Toronto Stock Exchange Composite Index five years in a row, a period when oil prices almost tripled.
"If you look at how badly Petro-Canada has underperformed over the last five years, you’d say it’s a fair deal," said Gavin Graham, director of investments at Bank of Montreal Asset Management in Toronto. "Suncor has to demonstrate that it can actually run those assets better. Given their track record, they are very likely to do so." Suncor, which lost 56 percent of its market value last year, had jumped 30 percent this year before today, the most among Canadian oil companies valued at more than C$1 billion.

Essar Steel bidding for Stelco

Essar Global, the overseas investment arm of the Essar Group, has been shortlisted along with two other bidders for the acquisition of North American steel maker Stelco. The other two companies in the race are Metinvest of Ukraine and Russian steel maker OAO Severstal.

Going by its stock price, the acquisition of Stelco could cost over $700 million (Rs 2,800 crore).

Stelco is one of the largest Canadian steel producers with 4,300-odd employees and an estimated 16 per cent share of the domestic market. It has two steel making units with 4.8 million tonnes of raw steel production capacity, four steel processing facilities and ownership in three iron ore mines which have combined reserves of 480 million tonnes for a reserve life of over 25 years.

Industry experts said a Stelco acquisition would help the Essar Group cater to the North American automotive industry better as more than half of Stelco’s shipments are meant for the automotive industry. An auto capacity of nearly 3 million vehicles a year is located in the vicinity of Stelco units.

A successful acquisition of Stelco would mean the third purchase by the Essar Group. It recently acquired Canadian steel maker Algoma, which supplies sheets to US car makers, including General Motors and Ford, in an all-cash deal of $1.6 billion (Rs 6,400 crore).

It also purchased Minnesota Steel, a US-based privately held company, for Rs 200 crore. The group is also investing $1.65 billion to develop the foreign company’s iron ore reserves of 1.4 billion tonne.

(Source: Business Standard )

Rolta to buy Canada's Orion Technology

Indian software firm Rolta on Friday said it was signing an agreement to acquire the Canadian software firm Orion Technology for an undisclosed amount.

Without disclosing the deal size, Rolta, in a statement here said it expected to generate around $100 million over the next five years by integrating the acquired technology from Orion, which specialized in enterprise web-GIS (geographical information systems) solutions.

Orion will continue its operations under the same name from its headquarters in Canada, and would be managed and operated by the management team that is currently in place.

Orion's founder and chairman Zul Jiwani said: "We are excited about becoming a part of the Rolta group. This fulfils our aspiration to have a global reach for promoting widespread use of our products and services.

(Source: Economic Times)