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Husky Energy Proposes To Buy MEG Energy For $3.3 Bln In Cash And Stock

Husky Energy Inc. (HSE.TO) has proposed to buy MEG Energy Corp. (MEG.TO) for a total equity consideration of about $3.3 billion.

The proposal values MEG at enterprise value of $6.4 billion, including the assumption of about $3.1 billion of debt.

Husky has proposed to buy each MEG share for $11 in cash or 0.485 of a Husky share, subject to maximum aggregate cash consideration of $1 billion and a maximum aggregate number of Husky shares issued of about 107 million.

The share exchange ratio has been calculated based on Husky's closing share price of $22.68 as of Friday, September 28, 2018, the last trading day prior to this proposal.

Husky's proposal delivers an immediate 44 percent premium to the 10-day volume-weighted average MEG share price of $7.62 as of Friday, September 28, 2018 and a 37 percent premium to MEG's closing price of $8.03 as of that date.

The transaction will be accretive to Husky's free cash flow, funds from operations, earnings and production on a per share basis.

The combined company will have total Upstream production of more than 410,000 barrels of oil equivalent per day and Downstream refining and upgrading capacity of approximately 400,000 barrels per day.

"Husky is confident the proposed transaction is in the best interests of Husky and MEG shareholders, employees and stakeholders," said CEO Rob Peabody. "However, to date, the MEG Board of Directors has refused to engage in a discussion on the merits of a transaction, giving us no option but to bring this offer directly to MEG shareholders."

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