Repsol SA has agreed to pay $8.3 billion to buy Talisman Energy, scooping up a Canada-based oil-and-gas producer in a deal that had reportedly been in the works since at least this summer.
The Spanish oil giant agreed to pay $8 per U.S. Share in the all-cash transaction, an offer that is a 56% premium to Talisman Energy’s (TLM) closing price on the New York Stock Exchange. The transaction’s value swells to about $13 billion when factoring in Talisman’s debt.
Talisman’s shares traded above $10 earlier this year and were at nearly $25 in 2011, though they haven’t traded at such lofty levels for quite some time. Repsol has reportedly been exploring a bid for Talisman since at least this summer, before oil prices notched their steep declines in recent months. Talisman also generated headlines a little over a year ago when it was reported that activist investor Carl Icahn had amassed a nearly 6% stake in the company, buying into the company at a time when Talisman was hit hard by weak North American natural-gas prices.
Talisman’s board unanimously approved the deal and recommended that shareholders vote in favor of the bid at a special meeting to be held in February. Repsol also made several overtures to Canada, touting plans to maintain a large management office in Calgary and promising Talisman’s Canada assets will continue to be managed locally.
Ahead of this deal, Talisman has attempted to clean up its balance sheet, reducing capital spending by 20% in 2013, reporting higher cash flow and selling off some non-core assets. The company had said it would focus on its best assets in two core regions: the Americas and Asia-Pacific. Recent results signaled a turnaround, with revenue for the first nine months of 2014 climbing 4.6% to $3.72 billion and with the bottom-line results swinging to a profit from a year-ago net loss.