Canadian Oil Sands investor urges shareholders reject Suncor bid

By Nia Williams
CALGARY, Alberta, Jan 5 (Reuters) - A major Canadian Oil
Sands Ltd COS.TO investor sent an open letter to fellow
shareholders on Tuesday urging them to reject a C$4.3 billion
($3.1 billion) hostile takeover bid by Suncor Energy Inc SU.TO
that expires this Friday.
Seymour Schulich said shareholders should not sell at the
current price offered and that he believed Suncor was willing to
pay more. Schulich, who could not immediately be reached for
comment, reportedly owns about 5 percent of Canadian Oil Sands,
which would make him one of its largest investors.
"Suncor is trying to pull a fast one on all of us," Schulich
wrote. "Quite simply, they're offering an unacceptable price for
an irreplaceable asset."
Last week, the board of Canadian Oil Sands sent a letter to
shareholders urging them to reject Suncor's offer because it
undervalues the company.
With a 36.7 stake in Syncrude, Canadian Oil Sands is the
largest-interest owner in the joint venture Syncrude mining and
upgrading project, which has capacity to produce up to 350,000
barrels per day, making it the largest single source of crude
production in Canada.
However, the project has been dogged by operating issues.
Suncor says that by taking a larger stake in the project it
would be able to improve production rates.
Suncor currently owns 12 percent of Syncrude, a stake that
would rise to 49 percent if its bid were successful.
In his letter, Schulich argued Syncrude had reduced costs in
a low oil price environment and shares in Canadian Oil Sands
were well positioned to slingshot higher when the price of oil
rebounds. Global crude prices have plunged around 70 percent in
18 months, with U.S. crude CLc1 last trading at $36 a barrel.
Suncor Chief Executive Steve Williams said he respected
Schulich's perspective but did not think it reflected of the
broader view of shareholders.
"The indications this week is that the majority of
shareholders are going to support," Williams said on a
conference call, in which he once again urged investors to
tender to the bid.
"The choice is yours, you can accept Suncor's offer and
capture a significant premium while retaining oil sands exposure
... or you can absorb an immediate share price decline, possibly
of 40 percent or more, and hope for an oil price recovery."
Canadian Oil Sands shares were last up 19 cents on the
Toronto Stock Exchange at C$8.08, more than 30 percent from
their closing price before Suncor's offer on Oct. 5. However,
the share price has slid over the last week as Friday's bid
deadline nears.
Suncor was last trading down 35 cents at C$34.93.
($1 = 1.3971 Canadian dollars)