Cenovus Energy said its proposed buyout of rival MEG Energy will unlock hundreds of millions of dollars in savings by consolidating their neighboring oil-sands operations in Alberta.

Cenovus Energy Inc. has signed a cash-and-stock deal to buy MEG Energy Corp. that values the company at $7.9 billion, including debt. The deal comes after Strathcona Resources Ltd. made an unsolicited offer for MEG in May that the company urged shareholders to reject.

Cenovus Energy Inc. (NYSE:CVE) said Thursday it will acquire MEG Energy Corp. (OTC:MEGEF) in a cash-and-stock deal valued at $7.9 billion, including debt, creating one of the largest players in Canada’s oil sands sector.