Suncor to Buy Rival Petro-Canada

Updated from 3:13 a.m. EDT

Suncor Energy (SU Quote) has agreed to acquire Petro-Canada(PCZ Quote) for $15.5 billion to create Canada's largest energy company.

The announcement from the companies confirms earlier published reports.

"This merger creates a made-in-Canada energy leader with the assets, cost structure and financial strength to compete globally," said Rick George, Suncor's president and CEO who will assume the same role with the merged entity. "The combined portfolio boasts the largest oil sands resource position, a strong Canadian downstream brand, solid conventional exploration and production assets, and low-cost production from Canada's east coast and internationally."

Under the terms of the deal, Petro-Canada shareholders will receive 1.28 common shares of the merged company for each common share of Petro-Canada they own. Suncor shareholders will get one share of the new firm for each Suncor share they own.

The exchange ratio represents a roughly 25% premium to the average share price of Petro-Canada over the last 30 days, the companies said. ...