Simon / Wascana
Company has been considered a prime buyout candiate by a senior operating company. Seems to be on everyones buy list. Shares have gone up to a good extent since talk about being a buy-out candiadate started. Company is based in Saskatchewan and ownership had been tied into the provincal government until just recently.
All of the info I just mentioned came off the top of my head. Check the accuracy of the comments. In the meantime, I'll check for more specifics.
I continue to like other seniors. They include Canadian Occidental Petroleum, Alberta Energy and Talisman Energy.
Here's the latest I have on Wascana.
Thursday, January 23, 1997
Regina - The merger mania sweeping the Alberta oil patch appears to be
moving east, as companies with significant Saskatchewan operations are the subject of takeover talk.
Wascana Energy is another company with large Saskatchewan holdings that has been mentioned as a possible takeover candidate.
Martin Molyneaux of First Energy Capital Corp. confirmed that Regina-based Wascana has been the subject of intense scrutiny from potential buyers or merger partners.
"It's pretty safe to say anyone who has exposure in Saskatchewan has looked at Wascana." He said.
Molyneaux said the current acquisition binge - Most recently Canadian 88 Energy's $652-million bid for Morrison Petroleums and Gulf Canada Resources $972-million attempted hostile takeover of Clyde Petroleum - is motivated by the desire for growth.
"It's all about growth. If you can't do it through the drill bit, then you do it through the market."
As the cast of land and drilling increases, companies start searching for undervalued companies to purchase. Until recently, Wascana, which was trading at $12 a few months ago was undervalued.
But the company's rising share price may be scaring off some suitors. Wascana's share price closed Tuesday at $16.50, down 25 cents, after hitting a 52-week high of $16.90 last week.
In fact, Molyneaux believes Wascana will go even higher in the year ahead. First Energy has established a one-year target price of $21.70 for Wascana, an increase of almost one-third from the current price.
Tim Jeffery, spokesperson for Wascana Energy, said the takeover talk is based on the mistaken view that Wascana is undervalued.
The market is looking for companies with a low cash flow multiple, which indicates the company is trading at a low price based on its ability to generate cash flow, he said.
"If you have a lower cash flow multiple, you come up on (potential buyers') radar screens. But that's history."
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