Repsol to acquire Talisman for $13bn

February 2015 | DEALFRONT | MERGERS & ACQUISITIONS

Financier Worldwide Magazine

Spanish oil and gas company Repsol has agreed a deal with Canada’s Talisman Energy to acquire 100 percent of the Canadian company’s shares for US$8.3bn (€6.64bn), as well as assumed debt of US$4.7bn.

The deal, which is the largest international transaction by a Spanish company in the last five years, will transform Repsol into one of the world’s largest privately-owned energy groups, with increased presence in OECD countries, incorporating reserves and production in politically stable countries. Additionally, it will add a significant exploration portfolio and high-quality productive assets in North America (Canada and US), South-East Asia (Indonesia, Malaysia and Vietnam), as well as Colombia and Norway.

“The agreement with Talisman is the result of an exhaustive analysis of more than 100 companies and assets worldwide,” said Jon Imaz, Repsol’s chief executive. “In every area, Talisman has always been the best option, because of the excellent quality of its complementary global assets, including its talent. With Repsol’s ability to support growth of these assets there is much value to be realised – it is a win-win situation and will transform Repsol.”

Once the transaction is complete (expected in mid-2015), North America’s weight in the resulting company will increase to almost 50 percent of capital employed in exploration. Latin America, in turn, will represent 22 percent. Repsol’s incorporation of Talisman will increase the output of the Repsol Group by 76 percent to 680,000 barrels of oil equivalent per day, and will boost reserves by 55 percent to 2,353 billion barrels of oil equivalent. The resulting group will be present in more than 50 countries with over 27,000 employees.

The significant long-term benefits of the Repsol/Talisman transaction to Alberta and Canada include the following: (i) Talisman will be a very significant part of Repsol’s worldwide presence; (ii) Repsol plans to leverage Talisman’s assets and its highly-skilled talent, including the company’s offshore and unconventional capabilities; (iii) Repsol has the track record and financial flexibility to accelerate the development of Talisman’s oil and gas assets, which will provide tangible and immediate benefits for Canada and create meaningful opportunities for employees, while retaining Talisman’s talent in Canada; (iv) Calgary will be home to one of Repsol’s largest management offices, and will be an important exploration and production centre for the combined company, while Talisman’s Canadian assets will continue to be managed locally in Canada; (v) Repsol has a distinguished record in environmental and social responsibility issues, and it has committed to uphold and enhance Talisman’s programs in these areas both in Canada and around the world; (vi) Repsol is the highest scoring oil and gas company in the Dow Jones Sustainability Indices in two out of the last three years; and (vii) Repsol will comply with all Canadian regulatory requirements and will submit a full application to Industry Canada as soon as practicable.

Approved unanimously by the boards of directors of Talisman Energy and Repsol, the deal is set to improve Repsol´s competitiveness, increase and balance its exploration portfolio, reinforce the upstream business unit and provide a strong platform for growth.

“This is a transformative and exciting deal which will make us one of the world’s most significant players and which will allow us to grow as a company and reinforce Repsol as a solid and competitive integrated player,” said Repsol chairman Antonio Brufau. “Talisman is an excellent company which will add its experience and proven track record in production assets that will add to that of Repsol in deep water exploration. This will significantly boost joint development.”

Chuck Williamson, chairman of Talisman Energy, added: “This deal creates significant and immediate value for Talisman stakeholders. Repsol is a world-class operator with a solid track record and the resources to continue the development of these assets within their international portfolio. I am proud of the company that our employees, past and present, have built and I believe this transaction represents new opportunities for them in Canada and around the world.”

Fraser Tennant