Cenovus Energy Inc. shares tumbled a day after the company agreed to buy most of ConocoPhillips Co.'s oil sands assets in a $17.7-billion cash-and-stock deal.
Shares of the Calgary-based oil sands producer were down more than 13 per cent, falling to around $15.17 midday in Thursday's session on the Toronto Stock Exchange.
That's below the bought-deal issue price of $16 apiece announced as part of the financing plan on Wednesday. Banks that bought the shares from Cenovus and are reselling them to investors would lose money on any shares they sell at a price below $15.48, reflecting the 3.25-per-cent commission they charged the company.
Just before noon, the shares were trading down 12 per cent at $15.35 in Toronto.
A banker who was not on the deal said U.S. investors are wary, citing concerns that U.S. Republicans will slap a border tax on imports, hurting exports of Canadian oil.
The acquisition by Cenovus is the biggest oil sands deal to date, eclipsing Canadian Natural Resources Ltd.'s purchase of Royal Dutch Shell's oil sands holdings earlier this month. It would double Cenovus total production.
Cenovus said it would also sell assets pumping around 50,000 barrels per day to help fund the deal. It has also arranged $10.5-billion in loans.
The bought deal is co-led by JP Morgan and Royal Bank of Canada. It included an overallotment option that allowed the banks to purchase up to an additional 28.12 million shares for potential total proceeds of $3.45-billion.
The acquisition is expected to close in the second quarter.
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Andrew Willis