Suncor close to acquiring Petro-Canada

[roopi]

Quite the shocker IMO. I thought Suncor would be aquired by someone outside of Canada but that won't be happening now:

http://business.theglobeandmail.com/servlet/story/RTGAM.20090322.wsuncor0322/BNStory/Business/home

[no_joke]

Not that I give a shit about big oil companies, but it will be "interesting" how everything plays out in the oilsands if this deal goes through. Specifically what they decide to do with Fort Hills. Thanks for the heads-up. I had not heard anything about this until now. The article says that an announcement may be made tomorrow. Kudos to their M&A groups for keeping it under wraps.

[guessboi]

I just saw this as well! wow. wonder what the stock prices will be tomorrow. :rolleyes:

[bigboom]

sounds like its going to be an all stock deal no cash...SU is probably going to drop and PCA will have a slight gain.

[Xtrema]

Holy shit, am I the only one seeing even more job losses as the 2 integrate and streamline?

[Eleanor]

Done deal.

$15.5 Billion


TORONTO (AP) — Suncor Energy Inc. will acquire Petro-Canada for $15.5 billion, uniting two of Canada's biggest oil companies as the nation's energy industry retrenches.

If the deal announced Monday is approved, the combined company would have a market capitalization of about $38 billion.

That's much smaller than global heavyweights such as Exxon Mobil and ConocoPhillips, which boast market capitalizations of $326.6 billion and $55.97 billion respectively, but the company would have some of the same benefits of scale.

The companies said they could save $244 million in operating costs and $812 million in capital efficiencies each year.

Petro-Canada shares jumped 29 percent, or $6.99, to $31 in premarket trading. Suncor shares fell 29 cents to $25.

Both companies have put off projects to develop oil sands in Alberta because oil prices now are too low to make the projects viable. Alberta's once-booming oil sands sector has cooled as every major company has scrapped or delayed some expansion plans as the price of oil has plummeted from its record high last summer.

Industry officials estimate the oil sands in northern Alberta could yield as much as 175 billion barrels of oil, making Canada second only to Saudi Arabia in crude oil reserves.

Suncor, founded in 1953, is the world's second-largest oil sands producer. Both were once state-owned oil companies.

"This merger creates a made-in-Canada energy leader with the assets, cost structure and financial strength to compete globally," said Rick George, president and chief executive officer of Suncor, who will continue in those roles in the new company.

Petro-Canada common shareholders would receive 1.28 common shares of the expanded company for each share of Petro-Canada, while Suncor shareholders will receive new shares on a one-for-one basis.

The share exchange represents a 25 percent premium for Petro-Canada shares, based on a 30-day weighted average of the share price. Based on the closing price Friday, the deal values Petro-Canada at $15.5 billion

Petro-Canada shareholders will hold 40 percent of the enlarged company and Suncor shareholders will hold 60 percent. Both companies are based in Calgary.

The deal is subject to approval by shareholders of both companies and government agencies.

"The merger will be good for shareholders of both companies with reduced capital requirements, operating efficiencies and complementary integration opportunities between upstream and downstream assets," said Ron Brenneman, president and chief executive officer of Petro-Canada. He will become executive vice chairman in the merged company.
http://www.google.com/hostednews/ap/article/ALeqM5hSaoorlrd2VvD3cedTikUv4Qm-5gD973OF0G0

[bigboom]

i think we're going to see a lot of these deals pop up in the next little while. all the nexen's/talisman's of the canadian oilpatch need to do something to keep up otherwise survival could be at stake.

[89coupe]

wtf is this doing in real estate / finance? This should be in current events.

[Euro838]

I guess I'm Suncor now.

I think this caught everyone by surprise as there has been no rumors or hints of anything like this happening. I'm sure at the executive level but for the rest of the company, no idea. Financially, PC is strong. I guess we'll see.

[liquid1010]

Originally posted by 89coupe
wtf is this doing in real estate / finance? This should be in current events.

I would presume because this is finance related. :rolleyes:

[89coupe]

Isn't this section related to users personal finance and real estate questions?

[Eleanor]

^ Just because this thread isn't where you put yours, doesn't mean you need to whine and complain about it.

Anyway, back OT, I think it's a good idea for the short term anyway, bigger companies are more likely to weather the storm.

[89coupe]

Regardless, I think a mod should move it the correct area.

[The Cosworth]

crappy weekend boys?

Sounds like someone has a case of the mondays.








Anyways, this seems like it will be a good move except for the duplicate jobs, hopefully they dont do a crazy purge right away here.

[szw]

Originally posted by 89coupe
Regardless, I think a mod should move it the correct area.

Yeah this should be in current events.

[Kimchee]

i guess im suncor to now....how does this effect our stock options, benefits, etc?

i took a flex day today, guess i'll have to see once i get into the office tomorrrow....

[liquid1010]

Originally posted by 89coupe
Regardless, I think a mod should move it the correct area.

My goodness dude - let it go...

If people are invested in Suncor (which many are) then this is directly related to finance - and more specifically personal finance.

[Mys73ri0]

Originally posted by Eleanor
^ Just because this thread isn't where you put yours, doesn't mean you need to whine and complain about it.

Anyway, back OT, I think it's a good idea for the short term anyway, bigger companies are more likely to weather the storm.

bigger doesn't mean better, short term or long term... look at some of the failing companies in the States...

[eljefe]

Originally posted by Mys73ri0


bigger doesn't mean better, short term or long term... look at some of the failing companies in the States...

That can be very subjective- it really is quite industry dependent

[Eleanor]

Originally posted by Mys73ri0
bigger doesn't mean better, short term or long term... look at some of the failing companies in the States... True, but look at how many smaller companies are failing in relation to the number of big companies failing. You don't hear about the smaller ones as much though.

[Xtrema]

Originally posted by Mys73ri0


bigger doesn't mean better, short term or long term... look at some of the failing companies in the States...

What that mean is bigger is harder to be a target of take over.

Royal Dutch Shell and Exxon are both big enough to swallow either on their own. Together, it's probably tougher.

Bigger can be lower cost. For example, with oil price so low and high cost nature of oilsand, and many people @ Suncor at low utilization rate, as part of this deal, it would probably mean all Petro Can staff that work on oilsand can be remove/replaced by Suncor staff where financially and technologically make sense.

And then there are the common cost centers, facilities, IT, accounting, hr etc that can do a 2 for 3 or 1 for 2 reduction. But with Suncor just outsourced to IBM and PetroCan started a recent contract with CCSI, I'm wondering how that unfolds.

I don't see Exploration going anywhere. They are still critical.

Retail side of Petro Can is probably safe for now as that's not Suncor's business. But retail make very little money so I won't be surprised if they will get rid of most Petro Can stations or turn them into a complete franchise model like Exxon in the US.

It's not like the Petro-Can brand is worth as much as Esso or Shell anyway to warrant its existence.

So I see may be 1000 to 1500 people will be out of work in the next 12-24 months because of this deal.

[bigboom]

Originally posted by Xtrema


What that mean is bigger is harder to be a target of take over.

Royal Dutch Shell and Exxon are both big enough to swallow either on their own. Together, it's probably tougher.

Bigger can be lower cost. For example, with oil price so low and high cost nature of oilsand, and many people @ Suncor at low utilization rate, as part of this deal, it would probably mean all Petro Can staff that work on oilsand can be remove/replaced by Suncor staff where financially and technologically make sense.

And then there are the common cost centers, facilities, IT, accounting, hr etc that can do a 2 for 3 or 1 for 2 reduction. But with Suncor just outsourced to IBM and PetroCan started a recent contract with CCSI, I'm wondering how that unfolds.

I don't see Exploration going anywhere. They are still critical.

Retail side of Petro Can is probably safe for now as that's not Suncor's business. But retail make very little money so I won't be surprised if they will get rid of most Petro Can stations or turn them into a complete franchise model like Exxon in the US.

It's not like the Petro-Can brand is worth as much as Esso or Shell anyway to warrant its existence.

So I see may be 1000 to 1500 people will be out of work in the next 12-24 months because of this deal.

Don't forget that cost of capital for the 2 companies combined in this kind of environment will be a lot cheaper too. This is quite a significant plus in this merger.

[8Ball]

Originally posted by Xtrema


So I see may be 1000 to 1500 people will be out of work in the next 12-24 months because of this deal.

the real numbers will be hard to calculate.
employee's
contractors
consultant
outsourced

[Xtrema]

Originally posted by 8Ball


the real numbers will be hard to calculate.
employee's
contractors
consultant
outsourced

Well, if they expect to save $300M and say $200M is coming from wages, at an average $100K/yr per staff, you're probably looking at 2000 positions to be removed.

[jshel101]

Originally posted by Xtrema


Well, if they expect to save $300M and say $200M is coming from wages, at an average $100K/yr per staff, you're probably looking at 2000 positions to be removed.
Y0u also have to look at the savings in benifits. So if you are looking at the 200k number, then the number will be closer to 1500 people. But I guess no one knows for sure untill the hammer falls.

[n1zm0]

my old man works for PC err Suncor, he said yesterday when they heard there was confirmation of the deal/merger everyone kinda stopped working and gossiped, in 3-6 months i guess he'll know, although his position is quite high in PC, he says its created enough buzz with his higher ups to be concerned.

good thing to know he had a plan B the day he started there 20 years ago.

[Thomas Gabriel]

I wouldn't be surprised if they end up cutting out the PC brand. It's only really needed for the downstream part of the company anyways, and all I hear from people I know in PC is that downstream doesn't do well.

[Euro838]

It's operational savings that they are talking about not labor only. This also means from their global operations, PC has interest in many countries i.e. Libya, etc. The non-producing/non-profitable units will probably be sold so savings will come from these areas. There are also a lot of "vacant" positions that are on the books right now too. I'd estimate a couple hundred of these. Not filling and cutting these positions will probably provide a lot of savings there too.

I read from the PanCanadian/AEB merger to form Encana resulted in roughly 10% of the Calgary workforce eliminated. I'd probably expect somewhere around that same number. I'd imagine the government would do whatever it can to ensure a deal like this does not result in a massive layoff. Especially in times like this (i.e. downturn, recession, etc)

Like everyone else has read, they are keeping the PC gas stations and eliminating the Sunoco brand stations but those are mainly in Ontario I do believe.

[Xtrema]

Originally posted by Euro838
I read from the PanCanadian/AEB merger to form Encana resulted in roughly 10% of the Calgary workforce eliminated. I'd probably expect somewhere around that same number. I'd imagine the government would do whatever it can to ensure a deal like this does not result in a massive layoff. Especially in times like this (i.e. downturn, recession, etc)


Government should stay away if they don't want to fuck with the investment community. Part of the rally yesterday, as bad as it sounds, are betting people will be laid off.

[Kimchee]

i just had a quick question, if i owned, say 500 SUNCOR stocks prior to the merger, does that mean that i will be given an additional 500 stock once the merger is complete?

and also 1.28 times for my PCA stock?

thanks

[Crymson]

Herald is reporting the first round of middle managment layoffs today.

[sxtasy]

link?

[luv2ride_bikes]

http://www.calgaryherald.com/business/Layoff+notices+Suncor+Petro+Canada+execs/1837192/story.html


I think by the end of September, there will be 3000+ layed off from this merger. This is my guess anyway

[Mibz]

Originally posted by sxtasy
link? http://www.calgaryherald.com/business/Layoff+slips+Suncor+Petro+execs/1837192/story.html

[eblend]

Originally posted by Crymson
Herald is reporting the first round of middle managment layoffs today.

Yep, knew this since last week, the whole deal actually, since a buddy who works here now got fired by PC a few month ago and kept in touch with his friends who were still at PC, they expect 3 waves of layoffs...useless people, people to help with intergration, and then people who are no longer needed after intergration.

[Xtrema]

Originally posted by eblend
useless people

Unfortunately, uselessness sometimes is determined by if you can suck a cock or kiss some asses.

The power struggle on the top levels was done weeks ago.

If your boss's boss is gone, chance are you are done too.