Repsol to buy Talisman Energy for hefty premium

Tue Dec 16, 2014 5:37pm EST
 
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By Julien Toyer and Jose Elías Rodríguez

MADRID (Reuters) - Spain's Repsol (REP.MC: Quote) has agreed to buy Talisman Energy TLM.TO, Canada's fifth-largest independent oil producer, for $8.3 billion as the drop in oil prices pushes energy companies to take the plunge on big M&A deals.

Repsol will also take on $4.7 billion of Talisman's debt.

A near halving in the oil price since June has lowered price tags on producers such as Talisman, spurring renewed interest from Repsol, which had long been searching for oil and gas assets in North America and elsewhere. [O/R]

But analysts said the Spanish company had paid a hefty price for the embattled Canadian company and in the long term it could have to consider a sale of its 30 percent stake in Gas Natural (GAS.MC: Quote), a move Repsol said was not in the works.

"We don't need to sell our stake in GasNat (Gas Natural) to do this deal. For us GasNat brings stability, dividends, optionality," Repsol Chairman Antonio Brufau told analysts.

The proposed acquisition will boost Repsol's exploration and production arm and fill a gap left by the seizure of its Argentine business, YPF, in 2012. It will also help to cut a reliance on high-risk oil-producing areas such as Libya and Venezuela.

Chief Executive Josu Jon Imaz said: "It's the right moment because now our valuation of Talisman assets is higher than the price we are paying." He said Talisman had what Repsol was looking for: growth in upstream business, geographical diversification and shale assets.

Repsol shares fell 0.4 percent to 5.64 euros. Shares in Talisman closed up 48 percent at C$8.84 in Toronto.   Continued...

 
Repsol chairman Antonio Brufau answers a question during a news conference at Repsol's headquarters in Madrid December 16, 2014.    REUTERS/Andrea Comas