Synenco Energy Inc. (TSE:SYN) shares moved up 3.36% today after the
company announced that it is conducting a strategic review and has
hired TD Securities Inc. and Merrill Lynch Canada Inc. to advise it.
The
move to explore strategic options came after the company halted
construction of a $4.7 billion refinery upgrade because it was becoming
too expensive. The halting of construction may affect Chinese oil giant
China Petroleum & Chemical Corp., who invested $119 million for a
40% stake in the project back in May 2005.
The stock caught
investors' eyes when the company stated that nothing has been ruled out
at this point and that it would consider as many options as possible.
These options could include anything from restructuring downstream
businesses for economies of scale to an outright sale of the
corporation.
Many analysts are pointing to China's Sinopec as
the logical buyer for the company at this point given their existing
40% stake in this project. And Sinopec did not deny that they were in
talks with the company! More, investors and analysts point to other
recent acquisitions in regional oil sands projects like Statoil ASA's
recent acquisition of North American Oil Sands Corp. for $1.97 billion.
Clearly there is interest in the company!
Whether or not a sale
of the company is in the cards remains to be seen, however this stock
is definitely one to keep an eye on in the meantime. Any sale of the
company could come at a substantial premium to the current market price
- even after today's move.
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