French Company Surrenders in Takeover Battle (TOT, SU, PCZ, TCK)

French supermajor oil company Total SA (NYSE:TOT) has let its offer for Canada’s UTS Energy Corporation expire. Total failed to get tenders for two-thirds of UTS’s shares, and has directed the tender depositary to return all deposited common shares of UTS.

Total last week raised its offer for UTS to CDN$1.75/share. The initial offer was made in late January at about CDN$1.30 (CDN$617 million). Total had hoped to add to its position in the Canadian oil sands play, but the proposed merger between Suncor Energy Inc. (NYSE:SU) and Petro-Canada (NYSE:PCZ) makes this offer for UTS less important.

UTS owns 20% of the Fort Hills project in Alberta, and Total was surely hoping to use that to lever an additional stake from either Petro-Canada, which owns 60% of the project and is the operator, or from Teck Cominco (NYSE:TCK), which owns the remaining 20%. It is now highly unlikely that Suncor will give up Petro-Canada’s share, and Teck’s share isn’t enough to give Total control of the project.

Total shares are off less than 1% in early trading today. The company’s 52-week range is $42.60-$91.34.

Paul Ausick
April 28, 2009