Canada's UTS rejects Total's improved bid of $685 million

18 April 2009

UTS Energy Corp's board of directors have rejected a sweetened C$830 million (US$685 million) takeover bid from French oil major Total SA, maintaining that improved oil prices and the proposed merger between Suncor Energy Inc and Petro-Canada have boosted its fortunes.

UTS's key asset is its 20 per cent stake in the undeveloped and stalled Fort Hills oilsands project in northern Alberta. Petro-Canada controls 60 per cent of that project. Suncor has been clear that should it merge with Petro-Canada, the oilsands will continue to be its priority. (See: Canadian oil-sands firm Suncor to acquire Petro-Canada for $13.7 billion)

"We see the proposed merger of Suncor and Petro-Canada as enhancing the intrinsic value of the Fort Hills project," said Will Roach, UTS's chief executive.

Total's new C$829.9 million ($674.7 million) bid is up from the C$1.30 a share offer the French oil major made in late January as it looked to boost its stake in Canada's oil sands, which have the biggest oil reserves outside the Middle East. (See: UTS Energy fights against Total bid).

The new offer still doesn't reflect the value of UTS' cash holdings or the company's main asset, a 20 per cent stake in the delayed Fort Hills oil sands project in northern Alberta, UTS said in a statement.

Meanwhile, the proposed takeover of Petro-Canada - the project leader of Fort Hills - by oil sands giant Suncor Energy Inc is expected to boost the development's economics.

"Several of our largest shareholders have publicly stated their ongoing opposition to, and displeasure with, Total's bid," Dennis Sharp, chairman of UTS' board of directors, said.