Cenovus Acquires Husky Energy

Shares still a bargain after the all-stock deal

Joe Gemino 26 October, 2020 | 2:34PM

Cenovus Facility

On Oct. 25, no-moat Cenovus Energy announced it will combine with Husky Energy in an all-stock deal. Husky shareholders will receive 0.7845 shares of Cenovus in exchange for each share of Husky’s stock. The exchange represents a 21% premium to Husky’s Oct. 23 closing price but is considerably less than our previous fair value estimate of $6. In addition, Husky shareholders will also receive 0.0651 of Cenovus purchase warrants for each share. The warrants carry a $6.54 strike price that can be exercised within five years of the transaction’s completion date. The transaction is expected to close during the first quarter of 2021.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Cenovus Energy Inc7.23 CAD5.39
Husky Energy Inc5.89 CAD5.37

About Author

Joe Gemino

Joe Gemino  Joe Gemino, CPA, is an equity analyst for Morningstar covering Canadian oil and Gas companies.

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