Talisman Energy To Be Acquired By Repsol In $13 Bln Deal

(RTTNews) - Canadian energy company Talisman Energy Inc. (TLM.TO, TLM) Tuesday said it has entered into a definitive agreement to be acquired by Spanish oil major Repsol S.A. (REPYY.PK) for $8.00 or C$9.33 per share in cash. Total transaction value is about $13 billion, including Talisman's debt.

The combined company is expected to possess the financial flexibility necessary to maximize the value of Talisman's large undeveloped resource base.

The purchase price for the common shares represents a 75 percent premium to the 7-day volume weighted average share price and a 60 percent premium to the 30-day volume weighted average price. The deal is expected to close in the second quarter of 2015.

Under the transaction, Talisman will be allowed to pay aggregate cash dividends of $0.18 per common share prior to closing, including the dividend declared and payable on December 31.

Chuck Williamson, Chairman of Talisman's Board, said, "This deal creates significant and immediate value for Talisman stakeholders. Importantly, the deal underscores Repsol's strong belief in the high quality portfolio that Talisman has worked hard to develop."

Once the deal is done, Calgary will be home to one of Repsol's largest management offices, and it will be an important exploration and production center for the combined company. Talisman's Canadian assets will continue to be managed locally in Canada.

The transaction has received the unanimous approval of the boards of directors of both companies. The Talisman Board also recommended that Talisman's common shareholders and preferred shareholders vote in favor of the arrangement at a special meeting of shareholders to be held in February 2015.

In addition, some of the directors and all of the executive officers of Talisman have signed agreements to vote their shares in favor of the transaction.

As per the agreement, Talisman can consider and accept a superior proposal if Repsol does not match the superior offer. If the agreement is terminated in certain circumstances, including if Talisman enters into an agreement with respect to a superior proposal, Repsol is entitled to a termination payment of $270 million.

Media reports last week indicated that Repsol was seeking to acquire Talisman in a deal that would value the company's equity at up to C$8 billion. Repsol executives reportedly traveled to Calgary, Alberta and were negotiating a takeover bid for Talisman Energy in a range of C$6 to C$8 per share.

Repsol was said to have dropped a plan to acquire Talisman in August 2014 after concluding due diligence on the company. However, recently talks were revived, as the Spanish company seeks to boost its presence in North America through acquisitions.

The fall in oil prices to fresh five-year lows has made companies like Talisman more attractive targets. Over the past year, the company saw a sharp fall in its stock price, from a peak of $11.77 on January 22 to a fall of $3.69 on December 11.

TLM closed up 19.4 percent at $5.12 on Monday, and gained around 20 percent in the extended trade. TLM.TO added 18.5 percent to C$5.97. Meanwhile, Repsol closed in Madrid on Monday at 15.69 euros.