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— Arbitrage —
UTS Energy Corp. |UTS.T Deal value C$830 million Spread 04/15/09 -C$0.04, or -2.2% French oil giant Total SA has sweetened its unsolicited bid for UTS Energy Corp. to C$1.75 per share, or about C$830 million ($682 million), from a previously rejected C$1.30 per share offer. UTS shares have not closed below C$1.58 since Total made its hostile approach and topped C$1.81 with the increased offer. The Calgary, Alberta-based oil sands company rejected Total's original offer in February and urges shareholders not to tender their shares. UTS says the sum of cash and investment to date in its oil sands projects is worth $3.57 per share.
UTS also claims that recent developments support its argument for
greater value, including the extension of its key Fort Hills mining
project lease and a 30% increase in the price of oil since late
January. Another game changer for UTS could be the announced merger of Shareholders representing roughly 15% of UTS do not support the bid. A spokesman for Paris-based Total says the C$1.75 bid is the company's final offer, and it is not willing to increase it even if a higher bid emerges. "We think the price is reasonable given all the uncertainties surrounding the [oil sands] projects. Projects in the area are still being pushed back, so it's reasonable given the risks," he says. Total's history may suggest otherwise. An analyst requesting anonymity cited the company's July acquisition of Synerco Energy Inc., in which it raised its offer to C$10.25 from $C9 per share and its September purchase of Deer Creek Energy Corp. Ltd., in which it raised its bid to C$1.67 billion from C$1.35 billion in response to a competing offer from an unnamed bidder. -- Michael Rudnick Verenex Energy Inc. |VNX.T Deal value C$500 million Spread 04/15/09 C$1.00, or 11.1% Libya's state-controlled National Oil Corp. is expected to make a decision soon on the C$500 million ($411 million) merger of Verenex Energy Inc. with China's CNPC International Ltd. The deal has been in limbo since NOC said it intends to exercise a right of first refusal to acquire Verenex if it goes up for sale. Verenex argues that NOC does not have that right because the deal involves a corporate level transaction, not a direct sale of Libyan assets. Still, Verenex has been negotiating with NOC over a required consent for the CNPCI deal. Verenex, of Calgary, Alberta, has an exploration and production sharing agreement and is a joint venture partner with NOC for a Libyan oil field known as Area 47. Verenex's merger agreement with CNPCI, which the Chinese government owns, hinges on receiving Libyan consent, including the waiver of any right of first refusal that might be triggered by the merger agreement. CNPCI is involved in the NOC negotiation, but the transaction is conditioned in a way that a bonus paid to NOC to obtain consent cannot exceed C$46.69 million. If NOC consent is granted, the deal can close in 35 days. The production agreement between NOC and Verenex mandates that disputes be resolved under the rules of arbitration of the International Chamber of Commerce in Paris. Libyan law governs the agreement. |
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