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There has been a flurry of activity since Suncor announced an unsolicited offer on October 5 to acquire all of the outstanding shares of Canadian Oil Sands (COS) for $4.3 billion. Under the offer, each COS shareholder would receive 0.25 shares of Suncor (SU) for each share of COS held. At the time, the offer represented a 35-per-cent premium to shareholders based on the 30-day weighted average trading price and would also result in dividends that are 45-per-cent higher than what COS shareholders currently receive. With the initial offer expiring December 4, 2015, the Alberta Securities Commission has approved a shareholder rights plan allowing the company more time and Suncor has extended their bid to January 8, 2016. COS has also announced that four credible parties have emerged but there has been no concrete offer from any of them yet. The arguments are interesting because what one views as a positive, the other spins it as a negative. We wanted to try to sift through the marketing and promotional aspects and see what the middle ground is, if any.
Suncor’s premium bid/Canadian Oil Sands’ undervaluation: