Repsol to Acquire Talisman for $8.00 Per Common Share In All-Cash Transaction

Source: 12/16/2014, Location: North America

Talisman Energy Inc has entered into a definitive agreement with Repsol S.A. under which Repsol will acquire all of the outstanding common shares of Talisman for US$8.00 (C$9.33) per share in cash.

The purchase price for the common shares represents a 75% premium to the 7-day volume weighted average share price and a 60% premium to the 30-day volume weighted average price. Total transaction value is approximately US$13 billion, including Talisman's current debt. In addition, under the transaction, Talisman will be allowed to pay aggregate cash dividends of US$0.18 per common share prior to closing, including the dividend declared and payable on December 31, 2014.

The combination of the two companies creates a global E&P company with improved scale, enhanced capabilities and more attractive opportunities for future growth. The combined company will possess the financial flexibility necessary to maximize the value of Talisman's large undeveloped resource base.

"This deal creates significant and immediate value for Talisman stakeholders," said Chuck Williamson, Chairman of Talisman's Board of Directors. "Importantly, the deal underscores Repsol's strong belief in the high quality portfolio that Talisman has worked hard to develop. Repsol is a world-class operator with a solid track record and the financial capability 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."

Antonio Brufau, Chairman of Repsol, said, "Our combination with Talisman allows us to align our highly complementary portfolios of upstream assets to create a truly global company well-positioned to grow production and reserves. Talisman has strong operational capability, a highly skilled work force and we look forward to leveraging their expertise as we partner to create a stronger, more profitable and competitive organization."

Benefits to Canada
This transaction provides tangible long-term benefits to Alberta and Canada, combining Calgary-based Talisman with Repsol and creating a leading global exploration and production company with a presence in over 50 countries and 27,000 employees.

Repsol has identified Talisman's Canadian assets as one of its primary growth areas and is committed to its development, including:
- Talisman will be a very significant part of Repsol's worldwide presence.

- Repsol plans to leverage Talisman's assets and its highly-skilled talent, including the company's offshore and unconventional capabilities.

- 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.

- Calgary will be home to one of Repsol's largest management offices, and it will be an important exploration and production center for the combined company. Talisman's Canadian assets will continue to be managed locally in Canada.

- 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.

- Repsol is the highest scoring oil and gas company in the Dow Jones Sustainability Indices in two out of the last three years.

- Repsol will comply with all Canadian regulatory requirements and will submit a full application to Industry Canada as soon as practicable.

Recommendation of the Talisman Board of Directors
Following an extensive review and analysis of the proposed transaction and other available alternatives, the Talisman Board has unanimously approved the transaction and recommends that Talisman's common shareholders and preferred shareholders vote in favor of the arrangement at a special meeting of shareholders to be held mid February 2015. In addition, certain of the directors and all of the executive officers of Talisman have signed agreements to vote their shares in favor of the transaction.

Additional Information on the Transaction
The transaction is to be effected pursuant to an arrangement under the Canada Business Corporations Act. The Arrangement Agreement between Talisman and Repsol provides for, among other things, a non-solicitation covenant on the part of Talisman, subject to customary "fiduciary out" provisions, that entitles Talisman to consider and accept a superior proposal if Repsol does not match the superior proposal. If the Arrangement Agreement is terminated in certain circumstances, including if Talisman enters into an agreement with respect to a superior proposal, Repsol is entitled to a termination payment of US$270 million.

Completion of the transaction is subject to customary closing conditions, including court approval of the Arrangement Agreement, approval of two-thirds of the votes cast by holders of common shares at the special meeting, and applicable government and regulatory approvals. The transaction is targeted to close in the second quarter of 2015.

Under the Arrangement Agreement, if approved by the holders in a separate class vote, Repsol will acquire the outstanding preferred shares of Talisman. However, closing of the Arrangement Agreement is not conditioned on approval by the holders of the Talisman preferred shares. If the requisite preferred shareholder approval is not obtained, the preferred shares will be excluded from the arrangement and will remain outstanding following completion of the arrangement.

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Related Categories: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Industrial Development  Insurance  Investment  Mergers and Acquisitions  Risk Management 

Related Articles: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Industrial Development  Insurance  Investment  Mergers and Acquisitions  Risk Management 

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