SU » Topics » Reasons for the Arrangement

This excerpt taken from the SU 6-K filed May 1, 2009.

Reasons for the Arrangement

        Following receipt of the advice and assistance of the financial advisors and legal counsel, the Petro-Canada Board carefully evaluated the terms of the proposed Arrangement, and ten of the twelve directors (with two directors voting against) at a meeting of Petro-Canada Board held on March 22, 2009: (a) determined that the Arrangement is fair to Petro-Canada Shareholders; (b) determined that the Arrangement and the entering into of the Arrangement Agreement are in the best interests of Petro-Canada; (c) approved the entering into of the Arrangement Agreement; and (d) resolved to recommend that Petro-Canada Shareholders vote in favour of the Arrangement. In reaching these determinations and approvals the Petro-Canada Board considered, among

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other things (including those matters described under "— Anticipated Benefits of the Arrangement"), the following factors and potential benefits and risks of the Arrangement:

    the Arrangement is the preferred transaction available to Petro-Canada and the Petro-Canada Shareholders following an extensive and thorough review of alternative strategic courses of action conducted by Petro-Canada, which included advice from RBC Dominion Securities, Deutsche Bank and Macleod Dixon and extensive contacts and discussions with third parties;

    the Petro-Canada Exchange Ratio represents an approximately 25% premium for the Petro-Canada Shares to the 30-day weighted-average trading price of such shares immediately prior to the announcement of the Arrangement;

    Petro-Canada Shareholders will be able to continue to participate in the growth opportunities associated with Amalco, as the combined corporation is anticipated to be a larger, stronger and more efficient company;

    RBC Dominion Securities and Deutsche Bank provided opinions, the full text of which can be found at Appendices E-1 and E-2 to this Information Circular, respectively, that, as of March 22, 2009 and subject to certain assumptions, qualifications and limitations, the Petro-Canada Exchange Ratio to be received by Petro-Canada Shareholders pursuant to the Arrangement is fair, from a financial point of view, to Petro-Canada Shareholders. See "— Petro-Canada Fairness Opinions";

    the exchange of Petro-Canada Shares for Amalco Shares will generally be tax-deferred for Petro-Canada Shareholders;

    under the Arrangement Agreement, until the time that the Petro-Canada Arrangement Resolution is approved, the Petro-Canada Board retains the ability to consider and respond to Superior Proposals on the specific terms and conditions set forth in the Arrangement Agreement;

    at least 662/3% of the votes cast by Petro-Canada Shareholders at the Petro-Canada Shareholders' Meeting are required to approve the Arrangement Resolution. Accordingly, Petro-Canada Shareholders are able to reject the Arrangement Resolution if they choose to do so;

    the Petro-Canada Shareholders have the ability to exercise their Dissent Rights; and

    the Arrangement requires approval by the Court.

        The information and factors described above and considered by the Petro-Canada Board in reaching its determinations and making its approvals are not intended to be exhaustive but include material factors considered by the Petro-Canada Board. In view of the wide variety of factors considered in connection with its evaluation of the Arrangement and the complexity of these matters, the Petro-Canada Board did not find it useful to, and did not attempt to, quantify, rank or otherwise assign relative weights to these factors. In addition, individual members of the Petro-Canada Board may have given different weight to different factors.

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