Suncor Petro-Canada

The combined company—which will operate under the Suncor name—will be the largest energy company in Canada with a market cap of $34.9 billion, and the fifth-largest in North America.

The takeover of Petro-Canada means the end of the integrated oil company created by the government in 1975 to make sure that there would be at least some Canadian ownership of the country's emerging energy resources.

The company was initially owned by the government, but was privatized in a 1991 IPO. Ottawa then sold half of Petro-Canada's common stock in 1995, reducing its interest to 19.9 percent; the government sold that last stake in 2004.

The companies are structuring the deal as an all-stock merger rather than a takeover. That means the Petro-Canada Public Participation Act will cover the combined entity and prohibit any one shareholder from owning more than 20 percent of the new company.

Petro-Canada has stakes in several oil sands projects, including a 12 percent share in Syncrude Canada Ltd., the world's biggest oil sands producer. Petro-Canada also has operations off the east coast of Canada and in the North Sea, Libya, Syria, and the Caribbean, as well as more than 1,300 retail outlets.

Suncor has the second-largest oil sands operation in the world. It also has refineries in Ontario and in Denver, where it refines gasoline for its 45 corporate-owned Phillips 66–branded stations.

Petro-Canada shareholders will receive 1.28 common shares of the merged company for each common share of Petro-Canada, and will own about 40 percent of the new company. Each Suncor share will be swapped for one share in the merged company. Suncor shareholders will own about 60 percent of the new entity.

Besides approval by Suncor's and Petro-Canada's shareholders, the deal needs the blessing of competition regulators, the Toronto Stock Exchange, and the Court of Queen's Bench of Alberta. The companies expect the deal to be completed in the third quarter of 2009.

© 2009 ALM Properties Inc.