PetroCan, Suncor investors bless deal, shares rise

By Scott Haggett

CALGARY, Alberta (Reuters) - Shareholders of both Petro-Canada (PCA.TO) and Suncor Energy Inc (SU.TO) overwhelmingly backed Suncor's C$22.2 billion ($20.2 billion) bid to buy Petro-Canada on Thursday, moving creation of Canada's biggest oil company a step closer.

At a meeting in Calgary, Petro-Canada shareholders voted 96 percent in favor of the transaction, which was first announced in March. All but 2 percent of Suncor shareholders backed the deal in a meeting held later on Thursday.

Petro-Canada shares jumped C$2.15, or nearly 5 percent, to C$47.15 on the Toronto Stock Exchange. Suncor, which has offered 1.28 of its shares for each Petro-Canada share, was up C$1.76, or 4.9 percent, at C$37.50.

The votes move Suncor's acquisition forward, but the companies still require approvals from Canada's Competition Bureau and an Alberta court before the transaction can close. Those approvals are expected to come by the end of the third quarter.

The deal is aimed at creating a dominant force in Alberta's oil sands, backed up by cash-generating assets off the country's East Coast, in the North Sea, and elsewhere.

"Together Petro-Canada and Suncor will have a commanding presence as Canada's largest energy company and the fifth largest in North America," Petro-Canada Chief Executive Ron Brenneman told shareholders. "The combined company will be large enough to compete in the top tier of global energy companies."

Analysts have said the merged firm's heft will allow it to exert control over costs in northern Alberta's oil sands, where projects were plagued by massive cost overruns and delays before the economic downturn started in late 2008.

Both Suncor and Petro-Canada stepped back from oil sands projects last year when the recession began to bite. While analysts expect Suncor to restart some delayed projects after the merger, Rick George, Suncor's chief executive, said he's reluctant to detail growth plans for the combined company until all needed approvals are in place.