Talisman Energy Inc. (USA) (NYSE:TLM) surges nearly 20% as the company confirms the speculations over its buyout talks with Spanish oil firm Repsol SA (ADR) (OTCMKTS:REPYY). The company said in an official statement that it has been approached by several firms. Currently it is pursuing discussions with Repsol.
Have analyst identified a ongoing trend in TLM?
Reuters also recently highlighted that Repsol has sent its executives to Calgary to further talks and finalize an offer for Talisman. Repsol offered a takeover of 100% of Talisman shares for approximately $8.3 billion. In addition, the Spanish company would also absorb $4.7 billion of Talisman debt, valuing the Canadian company at $13 billion.
Talisman Energy Inc. (USA) (NYSE:TLM)’s Board of Directors has approved the offer and also recommended shareholders to vote in favor of the transaction. Market capitalization of Talisman and Repsol SA is approximately $4.54 billion and $26.54 billion, respectively. The deal translates to $8 per Talisman common share compared to its previous closing of $5.12. The deal certainly delivers immediate value to Talisman shareholders.
Bloomberg earlier reported, citing sources familiar with the matter, that both the companies have revived discussions to consider possible options for the sale of a selected assets or the entire company. The report also highlighted Talisman’s declining valuation as one of the barriers to a deal, mainly attributable to lower-than-expected production from its North Sea assets.
However, the combined entity would result into more diversified and competitive global energy company with refining capacity of 1 Mboe per day and average daily production of approximately 680 Mboe.
The new company will provide necessary resources to maximize the value of Talisman Energy Inc. (USA) (NYSE:TLM)’s large undeveloped resource base. The transaction will also increase Repsol’s crude reserves by 55%. The entity would employ a staff of more than 27,000 employees across 50 countries. The transaction is expected to deliver tangible long-term benefits to Alberta and Canada and is anticipated to close in the second quarter of 2015, subject to customary closing conditions.
Chuck Williamson, Chairman of Talisman’s Board, said that the deal highlights Repsol’s faith in the high-quality portfolio of the company and this transaction will represent new opportunities for them.
Technicals
Talisman Energy Inc. (USA) (NYSE:TLM) shows a very strong supply zone in the area of $25-26 on the long term charts, where the price was resisted twice in 2008 and again in 2011. The second failure to cross that area cost the stock a lot as it crashed to $11 levels vertically. After spending nearly 3 years in the band of $10-$15, it has begun the latest downmove to make a low at $3.46 this month. This area of $3.30-50 is expected to provide strong support.
