Penn West adds heft with Canetic deal

By Scott Haggett and Jeffrey Jones

CALGARY, Alberta (Reuters) - Penn West Energy Trust (PWT_u.TO: Quote, Profile, Research, Stock Buzz) agreed on Wednesday to buy Canetic Resources Trust CNE_u.TO in a deal worth C$3.6 billion ($3.8 billion), solidifying its position as Canada's No. 2 trust and adding heft for yet more acquisitions

Exactly one year after Ottawa shocked the trust sector by scrapping the tax advantages the investment vehicles had enjoyed, Penn West said it will offer 0.515 of its units for each Canetic unit.

The bid is worth C$15.75 per Canetic unit, based on Penn West's closing price on Tuesday on the Toronto Stock Exchange. That is a 6.4 percent premium to Canetic's Tuesday close.

"The premium is pretty typical of what we've seen in trust mergers," said Les Stelmach, an analyst with Bissett Investment Management, which doesn't hold stakes in either firm. "You don't get big premiums on the target."

Canetic will also pay a one-time distribution of 9 Canadian cents per unit to its investors, boosting the value of the bid to C$15.84 a unit.

Penn West will also assume Canetic's C$1.6 billion debt in its biggest buy since last year's C$3.1 billion takeover of Petrofund Energy Trust.

ACQUISITIONS PLANNED

The deal adds Canetic's western Canadian production of nearly 80,000 barrels of oil equivalent (boed) a day -- boosting Penn West's output to as much as 210,000 boed -- 275 million barrels of proved plus probable reserves and about one million acres of exploration lands.