Repsol to buy Canada's Talisman Energy in $13-bn deal
16 December 2014
Spanish oil & gas giant Repsol today struck a deal to buy Talisman Energy, Canada's fifth-largest independent oil producer, for $13 billion including $4.7 billion debt, the largest international transaction by a Spanish company in the last five years.
Under the terms of the deal, Repsol is offering to pay $8 (€6.4) per share, a 24-per cent premium over Talisman's average share price of the last three months. Talisman's shares closed at $4.29 in New York on 12 December.
The offer price is $8.3 billion and including the $4.7-billion debt, the total transaction value to $13 billion.
Repsol intends to fund the acquisition mainly through its cash reserves.
Repsol had approached Talisman in July but talks broke down over the value of the Calgary-based company's North Sea operations, which has fallen by about 60 per cent since the end of August to C$4.5 billion ($3.9 billion)
Talisman, whose shareholders include activist investor Carl Icahn, had earlier said that it plans to sell assets worth $2-billion to $3-billion in the US, Canada and Norway in order to cut debt and boost profits.
The company has seen its stock price fall by nearly 66 per cent since the past four months due to decline in global crude prices and falling output in its North Sea assets.
Crude prices have declined by about 40 per cent since June to around $62 a barrel, and are widely expected to fall to a low of $53 a barrel in 2015.
Last year it sold a 75-per cent stake in its Montney oil field in northeast British Columbia to Progress Energy Canada Ltd for C$1.5 billion ($1.44 billion), and was reported to be in talks to sell its pipeline operations serving the Marcellus Shale region in New York and Pennsylvania to Regency Energy Partners.
The Toronto and New York stock exchanges-listed company has seen its revenues fall from $6.8 billion in 2012 to $4.7 last year.
Talisman, one of Canada's largest independent oil and gas company, is a global upstream oil and gas company operating in the Americas (North America and Colombia), and Asia-Pacific.
It holds interests in various oil and gas properties in Canada, the US, Malaysia, Vietnam, Papua New Guinea, the UK, Norway, Algeria, Colombia and the Kurdistan Region of Iraq, as well as in Australia / Timor-Leste.
The acquisition will transform Repsol into one of the largest energy groups worldwide, increase its presence in politically-stable OECD countries, and increase output by 76 per cent to 680,000 barrels of oil equivalent per day and will boost reserves by 55 per cent to more than 2.3 billion barrels of oil equivalent.
The merger will generate synergies of more than $200 million a year, basically from the optimisation of corporate functions, management of businesses and exploration, and an increased commercialisation capacity in North America.
''The agreement with Talisman is the result of an exhaustive analysis of more than 100 companies and assets worldwide. In every area, Talisman has always been the best option, because of the excellent quality of its complementary global assets, including its talent. With Repsol's ability to support the growth of these assets there is much value to be realized - it is a win-win situation'' said Josu Jon Imaz, the CEO of Repsol.
Antonio Brufau, chairman of Repsol, said, ''This is a transformative and exciting deal which will make us one of the world's most significant players and which will allow us to grow as a company and reinforce Repsol as a solid and competitive integrated player.''
''The deal underscores Repsol's belief in the strong set of assets Talisman has worked hard to develop. Repsol is a world-class operator with a solid track record and the resources to continue the development of these assets within their international portfolio,'' said, Chuck Williamson, chairman of Talisman Energy.
Madrid-based Respol is Spain's largest oil and gas company with market cap of €24.1 billion and 2013 revenues of $61.4 billion.