Canadian Hunter leaps on takeover talk
Speculation revolves around bid from Petro-Canada
Claudia Cattaneo, Calgary Bureau Chief -- Financial Post
CALGARY - Canadian Hunter Exploration Ltd. stock soared 16% yesterday on speculation it is on the verge of receiving a rich takeover offer.
The stock of the senior natural gas producer has risen by a third since rumours it is in talks for a deal started circulating Sept. 4.
On the same day, rival Anderson Exploration Ltd. received a takeover bid from Devon Energy Corp. for US $4.6-billion, representing a 50% premium to the market price.
There were two bidders for Anderson, analysts said at the time.
Canadian Hunter's huge appreciation and trading volumes in the past month -- and particularly yesterday -- suggest the company is finalizing a deal, analysts said.
"Where there is smoke there is fire, and there is a lot of smoke coming off Hunter," said Wilf Gobert, director of research at Peters & Co.
"I think it's as close to being gone as I have ever seen a company without an announcement," said Peter Linder, analyst at Research Capital Corp.
Stephen Savidant, chief executive of Canadian Hunter, said he's aware of the rumours but wouldn't comment. "We saw the trading, we saw the volumes, we saw the prices, and we saw the trading in some other companies, too, and there is obviously quite a few rumours circulating," he said.
Mr. Gobert said yesterday's speculation revolved around a bid from Petro-Canada in cash and stock at $46 to $49 for each Canadian Hunter share.
"If that's the case, it would be Anderson Exploration type mind boggling takeover numbers," Mr. Gobert said.
Anadarko Petroleum Corp., Phillips Petroleum Co., Alberta Energy Co., have also been suggested as potential buyers.
Canadian Hunter's stock closed at $41.85, up $5.75, in Toronto yesterday, shy of its April, 27 12-month high of $46.
The firm has a market capitalization of about $2.4-billion at current share prices and no debt.
Petro-Canada is sitting on $1.8-billion in cash. Analysts said the former federal crown corporation has been stockpiling the money to purchase all or part of Ottawa's remaining 18% interest if it comes up for sale and provided it's allowed to acquire it. The federal government could decide to sell it in a wide distribution.
Ron Brenneman, chief executive of Petro-Canada, said last month Petro-Canada had no say in the decision, that he regarded the cash as an underperforming asset, and that Petro-Canada was looking for opportunities to grow.
"They got all this money and they either buy back shares, they buy out the government, or they buy something," Mr. Gobert said.
Mr. Linder said Canadian Hunter is vulnerable because it's widely held, and next to AEC is the last remaining high-quality natural gas producer in Western Canada.
He said he expects the share prices of competitors like AEC and Rio Alto Exploration Ltd., another natural gas producer, to jump if Canadian Hunter is sold.
Laurie Stretch, a spokeswoman with Petro-Canada, wouldn't comment on the rumours.
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