By Ben Dummett and David Roman
TORONTO-- Talisman Energy Inc. confirmed Monday it is in talks
with Spain's Repsol S.A. for a potential transaction after media
reports that Repsol was nearing a takeover bid for the struggling
Canadian energy company.
In a statement, Talisman said it was in talks for a potential
"corporate transaction," but it didn't disclose details of the
possible deal. It also said it has been approached "by a number of
other parties regarding various transactions," but cautioned that a
transaction may not result from any of the talks.
Talisman issued the statement in response to a request from
Canadian stock-market regulators, it said.
Repsol said its board will meet Monday to discuss a possible
takeover bid for Canadian rival Talisman, a deal that would expand
the reach of the deep-pocketed Spanish oil company.
Repsol made the announcement at the request of Spain's stock
market regulator, or CNMV.
On Friday, The Wall Street Journal and other media reported
Repsol is in talks to acquire Talisman for as much as 8 billion
Canadian dollars ($6.9 billion), or between C$6 and C$8 per share.
In response, Talisman's stock surged 18% in Toronto trading Friday.
They are up another 17% in early trading Monday.
For Talisman, the deal would give it access to Repsol's
financial resources to better manage its operations in the low-oil
price environment while it tries to shed noncore assets. Talisman
faces a $900 million annual drain to keep its assets operating in
areas including the North Sea and Iraqi Kurdistan, according to
Standard & Poor's, which in October cut the company's credit
rating to triple-B-minus, one notch above junk.
Meanwhile, Repsol, which is flush with cash, would be able to
acquire assets at low prices as valuations have sunk in response to
the sliding crude prices.
Write to Ben Dummett at ben.dummett@wsj.com and David Roman at
david.roman@wsj.com
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