UPDATE:UTS Energy Shares Fall As Total Withdraws C$830 Million Bid
April 28 2009 - 12:15PM
Dow Jones News
French oil major Total SA (TOT) said Tuesday its has withdrawn
its C$830 million hostile bid for Canada's UTS Energy Corp. (UTS.T)
after failing to win over enough shareholders, kicking down shares
of the would-be oil sands developer.
Total had garnered less than the required two-thirds support
from shareholders when the C$1.75-a-share offer expired late
Monday, prompting the company to abandon the deal.
"We do not see for the time being any scenario that would allow
us to reach any deal with the [UTS] board," Total spokeswoman
Phenelope Semavoine said, adding that UTS is "not essential to our
long-term strategy in the oil sands."
UTS' board of directors had already come out against the offer
as "inadequate," urging shareholders to reject it despite being
sweetened from the initial C$1.30-a-share offer made in January.
Semavoine declined to comment on how many UTS shareholders had
supported Total's bid.
Following Total's announcement, UTS shares sank 17% to C$1.30 in
Toronto as the market opened Tuesday, before recovering to trade
recently at C$1.45, still down about 8%.
Total's bid for UTS focused on the Calgary firm's main asset, a
20% stake in Petro-Canada's (PCZ) delayed Fort Hills oil sands
development. The original C$617 million bid made in January marked
the first takeover attempt in Alberta's high-cost oil sands since
plunging crude prices squeezed project economics, prompting a
succession of delays and cancellations.
Crude's freefall from July's all-time highs near $150 a barrel
and the meltdown in financial markets wiped billions off oil-sands
companies' market valuations, and small non-producing firms like
UTS were among the hardest hit.
Total, which has made little secret of its enthusiasm for the
oil sands, already holds extensive leases near the Fort Hills site,
including a majority stake in the oft-stalled Joslyn mine. Current
production is limited, but Total is targeting 250,000 barrels a day
from the oil sands by 2020, Semavoine said.
The company "remains committed to its current activities and
investments in Canada, and will continue to implement its strategy
in the oil sands," Michael Borrell, head of Total's Canadian arm,
said in a statement.
-By Hyun Young Lee and Adam Mitchell, Dow Jones Newswires;
613-237-0669; hyunyoung.lee@dowjones.com