Aug 22 (Reuters) - Canadian oil and gas producer Cenovus Energy (CVE.TO) , opens new tab said on Friday it will buy MEG Energy (MEG.TO) , opens new tab in a cash-and-stock deal valued at C$7.9 billion ($5.68 billion), including debt, to create one of the largest oil sands companies in Canada.

The two companies, which will combine MEG's Christina Lake oil sands operations in Alberta with Cenovus' neighboring assets, will have a combined oil sands production of over 720,000 barrels per day.

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MEG Energy in June rejected a hostile takeover offer from Strathcona Resources (SCR.TO) , opens new tab, calling the bid inadequate and not in the best interest of its shareholders, and launched a strategic review to explore better alternatives.

James McFarland, chairman of MEG Energy, said on Friday its board and a special committee have "concluded that the proposed transaction with Cenovus represents the best strategic alternative" after considering Strathcona's unsolicited offer and engaging with multiple parties.

Strathcona Resources did not immediately respond to a Reuters request for comment on whether it was considering an enhanced bid or other options in response to Cenovus' offer.

Cenovus' offer of C$27.25 per share gives MEG an equity value of about C$6.93 billion, according to Reuters calculations. It represents a 27.9% premium to MEG's last close before Strathcona launched an unsolicited bid in May.

Under the deal, MEG shareholders will receive 75% of the consideration in cash and 25% in Cenovus shares.

The deal, approved by MEG's board, is expected to close early in the fourth quarter of 2025.

($1 = 1.3915 Canadian dollars)

(This story has been republished to remove an inaccurate image, with no changes to text)

https://www.reuters.com/business/energy/cenovus-acquire-meg-energy-c79-billion-deal-oil-sands-expansion-2025-08-22/