Lots of Day After News CommentsBesides the US vulture attorney's news of looking to make $ off the deal...(For non US readers, 3 US law firms now have filed suit over the deal.)
Globe says Talisman deal avoids imminent cash crunch
Talisman Energy Inc (C:TLM)
Shares Issued 1,036,166,028
Last Close 12/16/2014 $8.84
Wednesday December 17 2014 - In the News
The Globe and Mail reports in its Wednesday edition Repsol SA's $8.3-billion (U.S.) offer is the best Talisman Energy investors could expect in a crumbling oil market, its chief executive officer said Tuesday. The Globe's Jeffrey Jones quotes Hal Kvisle as saying Talisman, once an active acquirer of international assets, had weighed several options for its future as oil prices tumbled and its prospects dimmed in recent weeks. The $8-(U.S.)-per-share offer from the Spanish company, announced early Tuesday, prevents a likely cash crunch. "With some of the larger liabilities and challenges that we have in the North Sea and elsewhere it was going to be difficult for us to work our way out of that," Mr. Kvisle said. The cash offer represents a 75-per-cent premium to Talisman's average share price over the past seven days. Talisman was trading well into the $20 range as recently as 2011. Under the deal, Talisman's businesses will be folded into Repsol's. The transaction shows how quickly conditions worsened in the energy sector as crude prices sank to five-year lows, darkening the financial picture for players such as Talisman. West Texas Intermediate oil traded at about $56 (U.S.) a barrel Tuesday.
Globe says analysts "lukewarm" on Talisman deal
Talisman Energy Inc (C:TLM)
Shares Issued 1,036,166,028
Last Close 12/16/2014 $8.84
Wednesday December 17 2014 - In the News
The Globe and Mail reports in its Wednesday edition analysts figured Repsol SA's $9.33-a-share bid was as high as the company was going to get, and recommended investors tender their shares. The Globe's Jeffrey Jones quotes Desjardins analyst Justin Bouchard as saying in a note to clients "We believe the offer represents the best alternative for shareholders, especially with no visibility on the CEO search and expanding debt levels in a low-price commodity environment." Initial reaction to the deal on Repsol's conference call was "lukewarm," Canaccord analyst Richard Griffith said. "Nobody was congratulating them on the deal, which is unusual." The combined company will 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 work force will number 27,000, including roughly 3,000 employed by Talisman. Repsol said it did not yet know how Talisman staff might be affected, but pointed out that one of the reasons it was buying the company was for its expertise as well as its operations. Repsol's Kristian Rix added his company has more financial wherewithal to deal with the operational problems in the North Sea
Globe says Talisman deal sparks hopes for rest of patch
Talisman Energy Inc (C:TLM)
Shares Issued 1,036,166,028
Last Close 12/16/2014 $8.84
Wednesday December 17 2014 - In the News
Also Suncor Energy Inc (C:SU) In the News
The Globe and Mail reports in its Wednesday edition with Repsol SA's $8.3-billion (U.S.) bid for Talisman now on the table, some investors are beginning to wonder if the energy group isn't wildly oversold. The Globe's Jeffrey Jones writes now that the market is getting used to a markedly slimmer outlook for cash flow and capital spending in 2015, the Canadian energy sector is starting to look like it was bloodied a bit too much. Of course, Repsol's $9.33 cash bid for Talisman is no windfall for any investors who paid more than $20 for it in 2011 or earlier, but it was still a fat premium to recent levels. As recently as last Thursday, the stock was at a multiyear low of $4.30 in Toronto. In the absence of a bid, the company faced a future of trying to keep debt down by selling assets, eventually those that it relies upon for cash flow. Even then, buyers were becoming scarce. The S&P/TSX energy index jumped 6 per cent on Tuesday, a meaty gain that comes after a 44-per-cent skid since June that took it down to 2009 levels. Perhaps the stronger players have been oversold. Suncor has cut spending to deal with the price storm, but not to the point that would mean big drops in short-term production.
Post says Talisman won't be the last to capitulate
Talisman Energy Inc (C:TLM)
Shares Issued 1,036,166,028
Last Close 12/16/2014 $8.84
Wednesday December 17 2014 - In the News
The Financial Post reports in its Wednesday edition Talisman became the first Canadian oil patch company to surrender to the global oil price crash Tuesday, and it will not be the last. The Post's Claudia Cattaneo writes that with share prices at garage-sale levels, the whole Canadian energy sector is vulnerable to being picked on by anyone with a war chest. "The likelihood for high-profile M&A transactions is almost a guarantee," said Sonny Mottahed, at Black Spruce Merchant Capital. In anticipation of more consolidation, investors pushed up many battered Canadian energy names saw dramatic gains Wednesday. An early morning conference call to discuss the dea lasted a mere 12-minutes and generated no questions. The takeover, which also includes the assumption of $5-billion in debt, values the senior company at about a third of what it was worth in the market in 2011. Repsol is paying a full and fair price, said BMO's Brendan Warn in London. However, "If oil had stayed above $100, the deal may not have happened as Talisman would have ploughed on." Bryan Gould at Aspenleaf Energy said companies with high debt, low market credibility, lack of access to capital and high dividends are getting squeezed.
Post says Talisman holder Icahn to lose chunk of change
Talisman Energy Inc (C:TLM)
Shares Issued 1,036,166,028
Last Close 12/16/2014 $8.84
Wednesday December 17 2014 - In the News
The Financial Post reports in its Wednesday edition when Hal Kvisle came out of retirement to lead Talisman Energy Inc. as president and chief executive officer in September, 2012, it was only supposed to last for six months. The Post's Geoffrey Morgan writes the $13-billion deal was announced just before midnight Monday and is expected to close next year, postponing Mr. Kvisle's final days at the Calgary company (all figures U.S.). The deal for Talisman, one of Canada's largest independent oil and gas producers, comes after six months of speculation during which global oil prices dropped 45 per cent. At $8 a share, the offer marks a 75-per-cent premium to Talisman's seven-day average share price. "I think it would be hard not see that shareholders would be happy with this deal," Mr. Kvisle said in a Tuesday afternoon press conference. New York-based activist investor Carl Icahn is the second-largest shareholder in Talisman with 7 per cent of the company's shares. Mr. Icahn revealed he had built up a large position in the company in October, 2013, when the company's shares traded for roughly $12 per share. Mr. Icahn stands to lose $286-million under the terms of the merger, according to Bloomberg News.
Post says Talisman not alone in needing refuge
Talisman Energy Inc (C:TLM)
Shares Issued 1,036,166,028
Last Close 12/16/2014 $8.84
Wednesday December 17 2014 - In the News
The Financial Post reports in its Wednesday edition oil companies, both large and small, are more vulnerable to takeovers than they were a few months back. The Post's Barry Critchley, writing in Off the Record, says a lot of bankers are mulling the M&A opportunities after Spain's Repsol agreed to take over Talisman. It is tough raising start up capital in a sector engulfed with considerable doom, gloom and retrenchment. Indeed, the companies may get even cheaper given the mark down in reserves held by the producers. "Companies know that their reserves are going to be re-evaluated at these prices," said one veteran oil patch investment banker. Over the next few months, those new, lower reserve valuations, which imply lower valuations for the companies, will start making their way to the banks, the institutions that provide secured capital. "The companies are getting hit twice, by lower volumes [of reserves] and lower prices," noted one banker. Once those lower valuations reach the senior lenders, more adjustments can be expected as the banks try to arrange for more security for the loans they have made. The banks may use even lower reserve estimates and oil prices than those used by consultants.