Li Ka-shing's family has further expanded its presence in Canada's energy sector.

On October 5 local time, CKH HOLDINGS (HKEX: 00001) and the Li family, as the single largest shareholder with roughly a 30% stake in Canadian energy company Cenovus Energy, announced that Cenovus will acquire Canadian oil company Athabasca Oil Corporation in a deal with an enterprise value of about C$5.7 billion (approximately HK$31.4 billion), further strengthening its position in one of the world's core oil sands regions.

Deal structure and consideration

Under the agreement, Cenovus will acquire all outstanding shares of Athabasca at C$12 per share, representing a premium of about 13% over Athabasca's closing price on October 2. The transaction uses a mix of cash and stock, with the cash portion accounting for between 65% and 75%, capped at C$4.3 billion, and the stock portion capped at 44 million Cenovus shares, estimated at about 35% of the consideration based on the share price at the time of announcement. Cenovus said the cash consideration will be funded through cash on hand and certain short-term borrowings. After the deal closes, the group's net debt is expected to rise to approximately C$5 billion to C$5.5 billion in the near term, but the company's financial framework and its C$4 billion net debt target remain unchanged. The boards of both companies have unanimously approved the transaction, which still requires approval from Athabasca shareholders and Canadian regulators, with completion expected in December 2026.

Strategic rationale and synergies

Cenovus President and CEO Jon McKenzie said: "This transaction strengthens our position in one of the world's premier oil-producing regions and is a natural extension of Cenovus's oil sands strategy. Athabasca's high-quality, long-life assets are highly complementary to our portfolio, providing a clear opportunity to leverage our scale advantages and operational expertise." Athabasca's core assets, the Leismer and Corner projects, are located in northern Alberta, adjacent to Cenovus's existing Christina Lake, May River and Thornbury thermal operations. The high degree of geographic overlap creates conditions for integrated operations. In terms of production, Athabasca currently produces about 45,000 barrels of oil equivalent per day, with proved and probable reserve life exceeding 75 years. Cenovus expects that by applying its steam-assisted gravity drainage (SAGD) operating model, it can potentially increase Athabasca's thermal production to 115,000 barrels per day by 2032. On the financial side, Cenovus expects to achieve about C$85 million in annual corporate and commercial synergies, most of which will be realized within the first full year after the transaction closes. The market's reaction to the deal was somewhat cautious. On the day of the announcement, Cenovus shares closed down about 3%, as investors expressed concerns about the short-term increase in debt from the acquisition, while Athabasca shares rose more than 13% to close at C$12.01 per share, close to the acquisition price.

Li Ka-shing family's Canadian energy ties

In fact, the Li family's ties to Canada's oil industry date back nearly four decades. In December 1986, Li Ka-shing acquired a 52% stake in the then-struggling Husky Energy through Hutchison Whampoa for HK$3.2 billion, when international oil prices were only about US$11 per barrel. Li Ka-shing later described this deal as "one of the best investments of my life." Over more than 30 years under the Li family's stewardship, Husky Energy gradually grew into one of Canada's largest integrated energy companies. However, when oil prices plummeted in 2020, Husky Energy's share price fell more than 90% from its peak, and the market value held by the Li Ka-shing family evaporated by tens of billions of Hong Kong dollars at one point. In October of that year, Cenovus acquired Husky Energy in an all-stock deal valued at about C$23.6 billion. After the merger, CKH HOLDINGS and the Li family together held about 27% of Cenovus, becoming the largest shareholder of the newly formed Canada's second-largest integrated energy company. Currently, according to CKH HOLDINGS's official website, CKH HOLDINGS and the Li family trust together hold approximately 30% of Cenovus.