Repsol, the Spanish oil group, is in talks to acquire Talisman Energy of Canada, in a deal that could value the target's equity at up to $8 billion.
Senior Repsol executives are in Calgary for discussions, and hope to have a deal agreed before Christmas, according to one person involved in the negotiations.
The price being negotiated is in a range between $6 and $8 per share, which would represent a premium of up to 117 per cent to Talisman’s share price of C$4.26 (€2.96) on Thursday night. Including debt, the deal would give Talisman an enterprise value of about $10 billion to $12 billion.
The deal if agreed would be the first large transaction involving energy production companies since the oil price started falling last June.
Talisman confirmed on Monday that it had been “approached by a number of parties, including Repsol, with regards to various transactions”. It added then: “There is no assurance that any transaction will be agreed.”
Talisman was not available for comment yesterday. Repsol declined to comment.
Respsol was first in talks with Talisman about a possible deal over the summer, but decided to pull out because the price for the company would have been too high. Over the past six months, Talisman shares have fallen 62 per cent.
Repsol has about $10 billion in cash and short-term instruments available to make acquisitions following the payment of about $5 billion in compensation from the government of Argentina over the nationalisation of YPF, the Spanish company's business in South American country.
Repsol has said it wants to build up its presence in developed countries that are members of the Organisation for Economic Co-operation and Development, rather than exposing itself further to the higher political risks typical of emerging economies. – Copyright The Financial Times Limited 2014
