Our previous Canadian Mergers & Acquisitions roundups can be found here. Our previous global M&A roundups can be found here.

Target: Cenovus Energy Inc., Pelican Lake Assets

• Industry: Energy
• Acquirer: Canadian Natural Resources (TSX:CNQ)
• Target: Cenovus Energy Inc., Pelican Lake Assets
• Size: $975 million
• Consideration: 100% Cash
• Source of Funds: Debt
• Sell Side Advisers: CIBC Capital Markets, Barclays
• Buy Side Adviser:
• Legal Advisers:
• Expected Close: September 30, 2017

Canadian Natural Resources (CNQ) entered into a definitive agreement to acquire the Pelican Lake heavy oil operations and assets in Northern Alberta from Cenovus Energy Inc. for $975 million on September 5, 2017.

The assets currently produce 19,600 BOE/d with an annualized 2017 operating margin of $150 million. As of June 30, 2017, the assets have yielded an operating margin of $74 million (YTD).

The deal also provides CNQ with complete ownership in the Pelican Lake sales pipeline, a net profits interest in the Primrose East operations area and undeveloped land in Alberta.

Cenovus will use the proceeds from the sale to retire the first tranche of its $3.6 billion bridge facility that was used to help fund its acquisition of ConocoPhillips. Cenovus will continue to explore additional asset sales as part of the company’s plans to bring down debt levels.

Target: First Quantum Minerals Ltd., Cobre Panama Project

• Industry: Metals & Mining
• Acquirer: Franco-Nevada Corporation (TSX:FNV)
• Target: First Quantum Minerals Ltd., Cobre Panama Project
• Size: $178 million
• Consideration: 100% Cash
• Source of Funds:
• Sell Side Advisers:
• Buy Side Adviser:
• Legal Advisers:
• Expected Close: September 2017

On September 7^th, 2017, Franco-Nevada Corporation agreed to acquire Cobre Panama project from First Quantum Minerals for $178 million.

The deal will provide Franco-Nevada with a stream of 302,000 ounces of refined gold and 4.8 million ounces of refined silver at competitive prices (20% of the spot price of gold and silver). After this capacity has been met, the price will increase to 50% of the spot price of gold and silver. This will allow Franco-Nevada to produce stronger profit margins on current mine plans.

First Quantum will use a portion of the proceeds to partially fund its acquisition of a 10% stake in Cobre Panama from one of its joint venture partners, LS Nikko Copper Inc. Cobre Panama is one of the most important metals & mining projects around the world which First Quantum wants to further develop to achieve higher levels of production and profits.

To better understand our M&A write-ups, please refer to the following:

Mergers & Acquisitions
Cash or Stock Consideration for M&A
Accretion/Dilution Part I: EPS, Earnings Yield & All-Stock Transactions
Accretion/Dilution Part II: Math and Breakeven Premiums
Accretion/Dilution Part III: Using Debt for Acquisitions
Accretion/Dilution Part IV: Synergies & Sources of Funds