Trading in MEG mixed after rejecting Husky Energy's hostile takeover bid

MEG Energy Corp. shares rose, fell and rose again Thursday morning after it formally rejected a hostile takeover offer from oilsands rival Husky Energy Inc.

The target company said after markets closed Wednesday that the Husky offer is opportunistic and undervalues its assets and prospects, adding it intends to conduct a formal process that could identify a white knight to make a better offer.

MEG shares rose by as much as 21 cents to $11 in morning trading on the Toronto Stock Exchange before falling back to near Wednesday's close of $10.79 and then rising again to $10.85.

Analysts continued to speculate in overnight reports that Husky will have to raise its bid to win over MEG's management.

They also found it doubtful that an alternate bidder will emerge for MEG given that its only product, oilsands bitumen, is facing severely discounted prices as new oilsands production from northern Alberta makes worse an export pipeline bottleneck.

In an email, Husky said it stands by its offer and encourages shareholders to accept the deal.

"We continue to believe the proposed combination of Husky and MEG is a unique opportunity to deliver substantial benefits to the shareholders of both companies," said CEO Rob Peabody in the email. "Nothing in the MEG circular changes the clear and compelling value our offer delivers to MEG shareholders."

With files from CBC News.