Conoco Acquires Gulf for $9.8B

Conoco Inc. and Gulf Canada Resources Limited announced on May 29, 2001 that their boards of directors unanimously approved an acquisition agreement under which Conoco Northern Inc., an indirect wholly owned Canadian subsidiary of Conoco, will acquire Gulf Canada for $12.40 per ordinary share in cash, or approximately $6.7 billion in total equity. Conoco also will assume approximately $3.1 billion of Gulf Canada’s net debt, preferred stock and minority interests, making the total value of the transaction $9.8 billion. The transaction is the largest deal ever done in the Canadian oilpatch and the largest cash transaction ever done in Canada.

With the addition of Gulf Canada’s proved reserves of over one billion barrels of oil equivalent (BOE), Conoco’s total worldwide reserves (including Syncrude) will increase almost 40 per cent to 3.7 billion BOE. Total worldwide production will increase 32 per cent to 335 million BOE in 2001.

Under the terms of the agreement, a wholly owned Canadian subsidiary of Conoco has commenced a tender offer to purchase all outstanding ordinary shares of Gulf Canada for $12.40 per share in cash. Gulf Canada’s board has unanimously voted to recommend that all Gulf Canada shareholders tender their shares to the offer. Upon the expiration of the tender offer, Conoco intends to acquire the balance of Gulf Canada’s ordinary shares by statutory acquisition or a second-step transaction for the same cash price as the tender offer. Conoco is headquartered in Houston. The combined company’s Canadian headquarters will remain in Calgary.

Bob Rooney (M&A, energy/natural resources), Noralee Bradley and Perry Spitznagel (M&A, corporate/commercial), Brent Kraus (corporate/commercial), Don Greenfield (energy/natural resources), and Alan Ross (tax) of Bennett Jones LLP (Calgary office), along with Guy Young of Haynes & Boone (Houston), acted as legal counsel to Gulf Canada. Nancy Dilts and Alan Scott of Gulf’s legal department also provided counsel to Gulf Canada, as well as James Riley of Ogilvy Renault, who acted for Gulf’s Board of Directors. Along with Wayne Byers and Rick Harrington of Conoco’s legal department, Richard Hall, Alan Stephenson, Lewis Steinberg, Paul Scrivano, Alyssa Wolpin and David Coull of Cravath, Swaine & Moore (New York), and Alan Bell, Jeff Kerbel, Henry Bertossi, Monica Kowal and Daniel Bernstein (corporate/securities), Leslie Morgan and Bryan Bailey (tax), Craig Thorburn, Mungo Hardwicke-Brown and Mark Nicholson (regulatory), Rick McIvor (commercial) and Jeremy Forgie (pensions) of Blake, Cassels & Graydon LLP (Toronto) acted as legal counsel to Conoco.