Takeover by Dome
The hostile takeover of Hudson's Bay Oil and Gas by Dome Petroleum occurred in the context of the new National Energy Program (NEP) that the Liberal federal government introduced in October 1980. Among others, the program's purpose was the "Canadianization of the oil industry and the achievement of energy self-sufficiency through conservation, more determined development of Canada's frontiers, and the building of new tar sands plants."[8] Additionally, the NEP "linked government exploration incentives with Canadian company ownership."[9] To work around the NEP, Dome Petroleum, which at the time was 65 percent foreign owned, created a new Canadian subsidiary called Dome Canada Limited to carry out its exploration work. This company launched officially on 30 January 1981 with assets of $842 million. Almost immediately, Dome president William E. Richards (1926–2008) set out to acquire HBOG, hoping to increase Dome Canada's cash flow. At the time, HBOG's majority shareholder was Conoco, who held a 52.9 percent stake. Dome conceived a plan whereby it would purchase a large stake in Conoco, threatening its independence, and then exchange this stake for Conoco's holdings in HBOG. On 5 May 1981, Dome made a public offer of $65 per share for 13 to 20 percent stake in Conoco (which was then trading at $50), and ended up purchasing 22 million shares for US $1.43 billion, or a 20 percent stake. On Sunday, 31 May at Conoco's head office in Stamford, Connecticut, Dome negotiated a deal for the return of its 20 percent stake of Conoco. Per the deal, Dome would give back all 22 million shares plus $245 million in cash in return for the 52.9 percent holdings of HBOG.[10]
In the fall of 1981, Dome set out to acquire the remaining holdings of Dome. The largest remaining block belonged to the Hudson's Bay Company, who held 10.1 percent. On 3 November at the King Edward Hotel in Toronto, Dome came to an agreement with Hudson's Bay to acquire the outstanding shares for $2.3 billion, bringing the total cost of the takeover to around $4 billion. The deal was approved by shareholders in January 1982 and HBOG was amalgamated with Dome officially on 10 March.
Dome's takeover of HBOG contributed to its spiraling debt, which reach $8 billion by the end of 1982. Other factors that contributed to its financial difficulties were the closure of a tax loophole vital to the HBOG takeover, rising interest rates, and an influx of foreign oil into eastern Canada.[11] Dome's debt spawned one of Canada's largest financial crises, as it had also received substantial loans from four of Canada's big five banks.
Hudson's Bay Oil and Gas's final president, Richard F. Haskayne (1934–), reflected later on the takeover:
In September 1988, Amoco Canada purchased Dome Petroleum Limited for $5.5 billion, thus gaining control of the former HBOG assets. HBOG was finally deregistered on 1 May 1989. BP Canada purchased Amoco Canada in 1998.
- Certainly nobody won in the Dome takeover. [...] And Canada lost a potential Northern Tiger. I don't see any Canadian Companies around today that could have exceeded HBOG, with our combination of an enormous land base, the auspicious discoveries we were making in Australia and Indonesia, and the disciplined people who went on to operate other petroleum giants. We should have been the ones taking over Dome. But because of the supercharged, overvalued performance of its shares, the stock markets wouldn't allow us to do that. Dome was trading at high multiples based merely on utter hype Jack [Gallagher] and Bill [Richards] had built up around their unproven Beaufort Sea holdings. Simply far better at promoting themselves than we were with HBOG, and supported by a fawning federal government, they stickhandled us out of existence.[12]
