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YPF money helps Repsol by over Canadian Talisman

Wednesday, December 17th 2014 - 07:27 UTC
Full article 5 comments
Argentina's Economy Minister Axel Kicillof negotiated the expropiation of YPF, which helped Repsol finance the takeover of Canada's Talisman. Argentina's Economy Minister Axel Kicillof negotiated the expropiation of YPF, which helped Repsol finance the takeover of Canada's Talisman.

The largest international deal by a Spanish company in the last five years, props up shares despite plummetting international oil prices.

 Talisman Energy Inc. has agreed to be acquired by Spain's Repsol SA in an 8.3-billion-dollar (plus debt) deal that has been unanimously approved and recommended by the Boards of Directors of the two companies, in what became the largest international deal by a Spanish company in the last five years.

Talisman shares were up about 47 percent just after the markets opened Tuesday.

”The acquisition will be financed with cash essentially obtained from the recovery of value from YPF following its expropriation [by Argentina] (US$6.3 billion) as well as other sources of liquidity available to the company,“ the Spanish firm said in a press release.

Under the deal, Repsol will pay $8 for each Talisman share. Debt included, the total value of the deal is about $13-billion. The transaction, which is still subject to the approval of the Canadian courts and Talisman shareholders, is expected to be complete in mid-2015 with a Plan of Arrangement.

“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 Antonio Brufau, Chairman of Repsol.

At the other end of the table, Talisman chairman Chuck Williamson said in a statement that ”This deal creates significant and immediate value for Talisman stakeholders“ and ”underscores Repsol's strong belief in the high quality portfolio that Talisman has worked hard to develop.“

The combined company is expected to produce 680,000 barrels of oil equivalent a day, a 76-per-cent increase to Repsol's current output, and have a presence in more than 50 countries. Its workforce will number 27,000, according to Talisman sources. On the Repsol front, it was also disclosed that the firm expects to boost its reserves by 55 percent, to more than 2.3 billion barrels of oil equivalent.

Analysts quoted by the Calgary-based The Globe and Mail were anyhow skeptical about the future of the merger. Richard Griffith of Canaccord Genuity Ltd. from London, UK, pointed out that the initial reaction was ”lukewarm“. He added that after the transaction was announced, ”nobody was congratulating them [the Repsol management] on the deal, which is unusual”. He added that “in terms of strategic fit, you wouldn’t describe [the Talisman acquisition] as perfect.”

Meanwhile, BMO Capital Markets specialist Brendan Warn said Repsol is “taking a bullish view on the oil price recovering” and paying “definitely a healthy premium compared to other transactions in Canada.”

Top Comments

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  • ChrisR

    ”Repsol is “taking a bullish view on the oil price recovering” and paying “definitely a healthy premium compared to other transactions in Canada.”

    Does Repsol have a death wish, it certainly appears so here.

    Who in their right mind pays OVER price when the commodity they are buying is falling in price?

    Have they actually GOT the money from the argies?

    Dec 17th, 2014 - 04:57 pm 0
  • Hernán

    Thank you President Barack Obama and Pope Francis, for your leadership. All countries of America (from Alaska to Tierra del fuego), appreciated and will recognize his leadership forever.

    Today December 17 is a day that will live forever in the memory of Latin Americans.

    Beyond, that many of us in Latin America not share the Cuban ideology, Cuba is an American country and should return to their roots, along with the rest of the countries of America, beyond ideologies, sitting at a table where all the American countries put forward their opinion.

    Now the challenge is to the Cubans themselves, hope in a future free elections and multiparty. Cuba should relax its political system towards new horizons, more democratic and flexible. The countries of Latin America has a fundamental role in this last item.

    NOW THE ONLY DISPUTE WHICH STANDS IS THE MATTER FALKLANDS / MALVINAS. THE UNITED KINGDOM MUST HAVE THE GREATNESS TO START A DIALOGUE, ONLY THAT, DIALOGUE, NOTHING MORE.

    A NEW AMERICA IS EMERGING FROM ALASKA TO TIERRA DEL FUEGO, LONDON TO GIVE ACCOUNT OF THAT.

    OTHERWISE, THE BRITISH ISLANDERS WILL BE THE ONLY PEOPLE IN ALL OUR GREAT AMERICA, ISOLATED WITHOUT BEING ACTIVE PARTICIPANTS OF OUR LIFE AS AMERICANS

    NOW AT THE MEETING OF MERCOSUR, HERE IN ARGENTINA, ALL COUNTRIES OF THE REGION (INCLUDING CHILE) ARE EXPRESSING, JUST RIGHT NOW, THE UNRESTRICTED SUPPORT FOR THE QUESTION MALVINAS AND VULTURES FUNDS TO ARGENTINA.

    FALKLANDS / MALVINAS, FROM TODAY AND LAST GREAT CAUSE OF AMERICA, WE LOVE YOU AND WISH YOU AT HOME, BEAUTIFUL, RADIANT AND VIBRANT AS YOU WENT SOMETIME.

    AMERICA WILL NEVER BE COMPLETE WITHOUT YOU.

    Dec 17th, 2014 - 06:56 pm 0
  • Think

    And a biiiiig “Apio Verde Tu Yú” para el Sr. Bergoglio!

    Dec 17th, 2014 - 07:26 pm 0
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