UPDATE 2-Canadian Oil Sands adopts poison pill to fend off Suncor

(Updates with Suncor comment)
By Nia Williams
CALGARY, Oct 7 (Reuters) - Canadian Oil Sands Ltd COS.TO
on Wednesday announced a new poison pill to try to thwart Suncor
Energy Inc's SU.TO hostile takeover bid, setting the stage for
a drawn-out battle that could reshape Alberta's high-cost oil
sands industry.
Canadian Oil Sands said its board had implemented the poison
pill, or shareholder rights plan, in addition to an existing one
to give investors enough time to weigh up Suncor's offer or
other takeover bids or strategic alternatives that might arise.
Suncor, Canada's largest oil producer, made an unsolicited
all-stock offer to acquire Canadian Oil Sands on Monday, valuing
it at about C$4.3 billion (3.29 billion). A successful deal
would give Suncor control of nearly half of the Syncrude oil
sands project, Canada's largest single-source producer of
synthetic oil. urn:newsml:reuters.com:*:nL3N1252J2
Shares of both companies were up more than 1 percent on
Wednesday.
"The board will consider Suncor's unsolicited offer in both
the current context and in light of the strong long-term
potential of Canadian Oil Sands," Chairman Donald Lowry said in
a statement.
Suncor said it was disappointed but not surprised by
Canadian Oil Sands' decision to adopt a new shareholder rights
plan in response to its offer.
"This inappropriate defensive tactic limits the ability of
COS shareholders to decide," Suncor Chief Executive Steve
Williams said.
If triggered, the new plan would give Canadian Oil Sands
shareholders other than the potential buyer the right to buy new
stock at a substantial discount to the market price. The
resulting dilution is designed to fend off unwanted takeover
bids.
"We view this change to the Shareholder Right Plan as being
extremely detrimental to Suncor's unsolicited bid for Canadian
Oil Sands," AltaCorp Capital Research analyst Nicholas Lupick
said.
The new plan also extends the duration of a permitted bid to
120 days, preventing Suncor's offer, which expires in early
December, from being considered unless it is extended.
"Suncor's recent offer is substantially less than the
proposal rejected by the board in April 2015," Canadian Oil
Sands said in its statement on Wednesday.
The company said Suncor initially approached it in March
with a letter containing no offer and then gave the board a
non-binding expression of interest in April.
Canadian Oil Sands said it rejected that proposal because
the implied price was below its share price of C$12.96 at that
time. The stock traded at C$9.39 on Wednesday.