Talisman Confirms Repsol Talks

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 [e-mail] and David Roman at [e-mail]

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