Oilsands major Cenovus Energy Inc. is poised to walk away with  MEG Energy Corp. after rival suitor Strathcona Resources Ltd. announced Friday it would drop its takeover bid for the pure-play oilsands producer.

Strathcona said it is abandoning its pursuit of MEG after the target company’s board accepted an increased offer from Cenovus earlier this week, seemingly putting an end to one of the Canadian oilpatch’s most contested corporate takeover battles.

MEG shareholders will still have to vote on the revised deal with Cenovus at a meeting on Oct. 22, though the outcome now appears largely a foregone conclusion.

“Strathcona withdrawing tells us that it’s close to a certainty that Cenovus is going to prevail,” Michael Tims, vice chair of Matco Investments Ltd., and former chair of influential Calgary energy investment dealer Peters & Co., said.

“It’s like being in the Tour de France and being ten miles ahead. There’s nobody else competing with Cenovus anymore.”

Strathcona said it was disappointed to be terminating its bid but that “anti-competitive actions taken by the MEG board” would make it difficult to counter Cenovus with an improved offer, the company said in a statement Friday afternoon.

The private-equity backed company, led by veteran oilpatch dealmaker

Adam Waterous , said it planned to hold a shareholder meeting in November to approve a $10 per-share special distribution to its shareholders, payable either as a dividend or return of capital.

Strathcona’s unexpected withdrawal came on the heels of MEG abruptly cancelling a special meeting this week where shareholders were set to either approve or reject a takeover offer from Cenvous.

The meeting was postponed to Oct. 22 after the board reached a new agreement with Cenovus on an

increased cash-and-stock offer worth $8.6 billion at Tuesday’s close. MEG’s updated deal with Cenovus included an agreement to waive the typical “standstill” provision, allowing Cenovus to buy up more of of MEG’s outstanding shares before the deal closed

— a move that industry experts said could effectively boost Cenovus’s influence at the rescheduled shareholder meeting on Oct. 22. 

On Friday, Strathcona characterized the move as “without precedent” in Canadian public markets.

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“Strathcona has concluded that the MEG board’s ability to continuously extend the Cenovus meeting date, and continuously allow Cenovus to purchase and vote additional shares, makes an improved offer for MEG impractical and not in the best interests of Strathcona shareholders,” the company said.

“While Strathcona is disappointed with this outcome, it is pleased that its actions, along with those of its fellow MEG shareholders, delivered something which the MEG board could not, namely a more equitable transaction with Cenovus which allows MEG shareholders to participate more meaningfully in future upside.”

Strathcona’s withdrawal caught many industry participants and energy investors off guard, many of whom had anticipated that Strathcona would would try to top Cenovus’s new offer.

“Shocked. Tip of the cap to the (Cenovus) team,” Cole Smead, CEO and portfolio manager of Smead Capital Management, said in a post on X.

Cenovus’s new offer values MEG at $29.79 per share, based on Friday’s market close.

If approved by its shareholders, the deal with Cenovus could close at the end of October, MEG said that Friday in a release.