ALBERTA

Talisman shares surge as Repsol confirms interest in possible takeover

12/15/2014 10:31 EST | Updated 02/14/2015 05:59 EST
CALGARY - Spanish energy giant Repsol confirmed Monday that it's considering a takeover of Talisman Energy Inc., sending shares in the Calgary-based company up more than 18 per cent.

"The company reports that, at the ordinary meeting of its board of directors to be held today, it will submit for consideration, among other matters, the analysis of a possible transaction consisting in the acquisition of the total share capital of the Canadian company Talisman Energy Inc.," Repsol said in a notice on its website, posted at the request of Spanish stock market regulators.

Talisman shares closed at $5.97 on the Toronto Stock Exchange, up 93 cents or more than 18 per cent.

The surge adds to another 18 per cent gain for the stock on Friday, when the Financial Times reported Repsol was looking at a bid for Talisman of between $6 and $8 per share.

In its own statement, also released at the behest of regulators, Talisman confirmed it's in talks with Repsol about a "potential corporate transaction."

"Talisman has also been approached by a number of other parties regarding various transactions. There can be no assurances that these discussions will result in a transaction or on what terms," it said.

According to a Bloomberg report, the Canada Pension Plan Investment Board is also said to be weighing a bid for Talisman.

Analysts have predicted the pace of mergers and acquisition in the oil patch will pick up as low oil prices put pressure on some names, especially those with high debt loads.

U.S. benchmark crude for January delivery dropped below $56 on Monday, down more than 47 per cent over the past six months.

Talisman, which over the past few years has been striving to better focus its global portfolio, has long been the subject of takeover speculation.

While its offshore assets in Southeast Asia and its position in several North American shale regions are seen to be attractive to potential bidders, its holdings in the U.K. North Sea have been cited as a hindrance to any potential deals as they've been prone to unplanned outages and have struggled to meet targets.

Last week, Edward Jones analyst Lanny Pendill said Talisman's bargain stock price — around $4 before the takeover talk heated up — increased the chances of an all-out takeover panning out.

"Obviously the North Sea assets are the Achilles heel here and that could be a stumbling block, but that may have been more of an issue when the stock was at $10-$11," Pendill said.

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