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  5. ARX: I have read your answers to the many questions on arx. [ARC Resources Ltd.]
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Investment Q&A

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Q: I have read your answers to the many questions on arx. Can you expand on your thesis that no one would want to get into a bidding war with Shell for arc resources? Why would CNQ or CVE not throw in a higher bid for ARC if they thought there was value in getting arc for let's say, less than $40 Can per share. Certainly CNQ has the financial abiltiy to do a large acquistion!? Is it because Shell is part owner of the LNG Canada export facility? This take overall will be good for me but I do think that ARC shares are worth more the $32 and change, since condensates are sky high which is good for ARC and nat gas is not that bad. Why is management wanting to turn over the reigns to Shell? Are they old and tired? Or is this Kakwa issue bigger than we think and they need Shell's expertise to dig them out of hole?
Asked by Paul on April 28, 2026
5i Research Answer:

Another party could enter the fray, but it would still be difficult to get ARX. In the current deal, there is a $600M break fee, so right off the bat another party has to pay $600M more (ARX pays this, but for a buyer it means $600M less value). In addition, in the deal Shell has a first right of refusal to match any superior offer. So a third party could bid, and still not end up with ARX if Shell decides to match the offer. Because of this, a third party might have to make a much larger bid, in order to make it not worthwhile for Shell to match. While not impossible, these restrictions just make it less likely. In addiiton, Shell's market cap is $250B or so, much larger than most companies would might be interested in ARX. In terms of reasoning behind the deal, more information will be revealed when the offering circular is available. 

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