SPANISH firm Repsol has agreed to buy Canadian oil company Talisman Energy for $8.3bn (£5.3bn), the equivalent of $8 per share.
This price represents a 60 per cent premium to last month’s share price.
According to Repsol, its output will increase by 76 per cent to 680,000 barrels of oil equivalent per day, and its reserves will be boosted by 55 per cent to more than 2.3bn barrels of oil equivalent.
The company said that the deal will add “first class producing and exploration assets” in Canada and the US, Indonesia, Malaysia and Vietnam, Colombia and Norway, among other sites. The combined business will operate in more than 50 countries, with over 27,000 employees.
Antonio Brufau, Repsol’s chairman, said: “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.”
And Chuck Williamson, chairman of Talisman Energy, commented: “The deal underscores Repsol’s belief in the strong set of assets Talisman has worked hard to develop. Repsol is a world-class operator with a solid track record and the resources to continue the development of these assets within their international portfolio.”
Brendan Warn, analyst at BMO Capital Markets, said: “If we take a bullish view on the recovery of the oil price, we believe the deal will benefit Repsol. If we believe we will remain in this weak oil price environment, this deal doesn’t initially appeal; however, we will have to trust Repsol to deliver further portfolio and cost synergies than stated.”
The brent crude oil price, which has been in decline for months, dropped below $60 at one point yesterday, although climbed back in later trading.