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Suncor makes bid for Canadian Oil Sands Ltd.

Suncor says offer put on the table is 'compelling' for rival shareholders.

By Daniel J. Graeber
Canadian energy company Suncor makes unsolicited offer for rival Canadian Oil Sands Ltd. UPI/Brian Kersey
Canadian energy company Suncor makes unsolicited offer for rival Canadian Oil Sands Ltd. UPI/Brian Kersey | License Photo

CALGARY, Alberta, Oct. 5 (UPI) -- Canadian energy company Suncor Energy said Monday it was making an unsolicited bid to take on the outstanding shares of its rival, Canadian Oil Sands Ltd.

"We believe this is a financially compelling opportunity for Canadian Oil Sands shareholders," Suncor President and Chief Executive Officer Steve Williams said in a statement.

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Suncor started 2015 by making "significant spending reductions" in its budget, which included an $830 million cut in capital spending and operating expense reduction of around $580 million over two years.

The cost-cutting effort included a hiring freeze and the elimination of 1,000 positions from its payroll.

In its second quarter financial reports, Canadian Oil Sands said capital spending was down more than 50 percent, cash flow from continuing operations was down 70 percent and a quarterly net loss of $97 million.

At the time, company President and CEO Ryan Kubik said he was confident about the company's financial position.

For shareholders, Suncor said the bid would alleviate some of the debt obligations for Canadian Oil Sands and result in a dividend increase of 45 percent.

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"By accepting this offer, Canadian Oil Sands shareholders will become investors in Canada's leading integrated energy company with 50 years of experience in oil sands operations and a track record of returning significant value to shareholders," Suncor's president said.

There was no statement on the bid from Canadian Oil Sands.

Canada's economy depends heavily on oil and gas revenue. Statistics Canada, the government's statistics office, said real gross domestic product in Canada slipped 0.2 percent in May, the fifth straight month for declines and a sign the Canadian economy is moving into formal recession. The government agency said the trend reversed in June, with gross domestic product increasing by 0.5 percent.

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