Spain's Repsol to Acquire Canada's Talisman Energy for $8.3 Billion

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Researched by Industrial Info Resources (Sugar Land, Texas)--Spanish oil company Repsol (MCE:REP) (Madrid, Spain) has agreed to acquire Canadian rival Talisman Energy (NYSE:TLM) (Calgary, Alberta) for $8.3 billion, to strengthen its operations in North America.

Industrial Info is tracking 98 Repsol-related projects worth $3.36 billion, and 26 Talisman-related projects worth $8.69 billion.

According to statements from both companies, Repsol plans to purchase 100% of Talisman's stock at $8 per share and will assume $4.72 billion of Talisman's debt.

"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," Repsol Chairman Antonio Brufau said in a press statement.

According to Repsol, the deal would increase the Spanish company's upstream operations from 38% to 58% of its total business, and move its North American operations from 30% of the upstream business to 50%.

Talisman Chief Executive Officer Hal Kvisle said that Repsol's financial strength will help the Canadian company to follow up on plans to focus its operations in the Americas and Southeast Asia.

"Our progress has been limited by our capital obligations in the North Sea and elsewhere, which affected our ability to fund growth opportunities," Kvisle said, according to Reuters.

Following the transaction, Repsol will be among the 15 largest privately owned oil & gas companies in the world. The Spanish company will increase its daily oil production 76% to 680,000 barrels after the acquisition.

Repsol's acquisition of Talisman would generate synergies of $220 million a year, according to a presentation to Spanish securities regulator CNMV. Repsol said it plans to finance the deal with money it received from the Argentine government's seizure of its Argentine subsidiary YPF in 2012. The Spanish company also plans to issue about 5 billion euros ($6.21 billion) in hybrid debt to secure its investment-grade credit rating after the deal.

Both companies' boards approved the deal, which Repsol said was the largest overseas acquisition by a Spanish firm in five years. The deal must still win the approval of Canadian regulators, who are expected to have taken action by mid-2015.

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