The Canadian energy firm increased its ownership in its target oil company to ensure the upcoming shareholder vote for its latest acquisition ends in success. Cenovus spent $581 million to buy shares of Athabasca Oil as a hedge to guarantee the passage of the merger, settling market speculation that recent unusual trading activity in the merger spread was the result of a rival bidder attempting to establish a toehold in the oil-sands operator.
The purchase is part of a proposed takeover of Athabasca for an implied enterprise value of C$5.7B. The investment comes as Cenovus reported a record third-quarter production of 1.024 million barrels of oil equivalent per day and net earnings of C$3.36B, up from C$1.29B a year earlier. During the period, the company returned C$1.9B to shareholders through dividends and share repurchases.