Suncor's hostile takeover bid for COS too close to call

With full-page newspaper ads, increased rhetoric by CEOs and a looming deadline, the war of words is heating up in Suncor's $4.5-billionhostile bid for Canadian Oil Sands an indicationthe outcome is too difficult to predict.

Prominent Canadian businessmanSeymour Schulichis urging fellow Canadian Oil Sands shareholders to reject the offer at the current price.

You must act now if you wishto accept our offer- Steve Williams, Suncor CEO

"The fact isSuncor needs Canadian Oil Sands more than we need them," wrote Schulichin his newspaper ad. He owns about five per cent of COS'sshares.

• ANALYSIS | Lower emissions, higher power prices, more oil? Alberta is getting off coal
• Suncor and COS: The art of the hostile takeover
• Canadian Oil Sands repeats call to remain independent

The intensified lobbying around the bid is an indicationthe outcome could go either way.

"I used to tell my clients when I was a money manager that if I could read the future I wouldn't have to do this for a living," said Schulich in an interview with CBC News on Tuesday."I have no idea. I've had a lot of people talk to me who don't like the bid."

"What they ultimately do is a function of a whole lot of factors in their own organizations."

Deadline looming

In a conference call Tuesday morning,SuncorCEO Steve Williams threw cold water on Schulich'sarguments, saying the company wouldn't bid this much again. He also said there is no plan to extend or improve the current offer, turningup the heat on shareholders.

"You must act now if you wishto accept our offer," he said on the call."Canadian Oil Sands shareholders who have not tendered their shares have an important decision to make and precious little time to act."

Both companies are partners in theSyncrudeoilsandsmine north of FortMcMurray, along with Imperial Oil.

With majority ownership of the operation, Suncorcan increase performance and reliability in many ways such as connecting the minewith the nearby Suncorsite and sharing the use of facilities such as upgraders, Williams said.

"The choice is yours," he said."You can accept Suncor's offer and capture a significant premium while retaining oilsands exposure through Canada's leading integrated energy company or you can absorb an immediate share price decline, possibly of 40 per cent or more, and hope for an oil price recovery."

Suncor took out its own newspaper ad on Tuesday stating "Hope is still not a strategy."

Uncertain outcome

The two sides have hurled insults at each other for the past few months, ever since Suncor showed interest in taking over its partner.

Consulting firmBrendan WoodInternationalhaspolledboth retail and institutional investors about their intentions with the bidand the firm says the outcome is too close to call.

The Canadian Oil Sandsboard has said the companycan weather prolonged low oil prices on its own and thrive once crude prices recover. While no other prospective buyers have emerged, analyst Kurt Wulff isn't completing ruling that out. It's one reason why he doesn't like the Suncor bid.

"I don't plan to tender my shares. The main reason is that I believe the value of Canadian Oil Sands is higher than what Suncor is offering," said Wulff, with McDep Associates. He owns shares in the company in his personal portfolio.

Like many others, he isn't sure what the result will be after Friday's deadline.

"That's a fair assessment. No one is convincing that they know the outcome."