Talisman Energy Inc. rebuffed a $17-billion (U.S.) takeover bid from a French utility, choosing to stick with its turnaround plan aimed at boosting the company’s value, according to a published report.
French electric and energy utility GDF Suez SA tried to buy Talisman for $17-billion including debt, according to a Reuters report out of London, which cited unnamed sources. The companies couldn’t agree on certain terms, and Talisman then turned down a written offer from GDF to buy part of the Canadian company in early December, Reuters reported.
The rejected bid underscores Talisman’s commitment to completing its sweeping reorganization and avoiding a fire sale. Chief executive Hal Kvisle has said his priority is on cleaning up the oil and gas company before he makes his exit some time in 2014. The company is under pressure to show progress, and Talisman shares have lagged in recent years amid lacklustre financial results.
A number of Canadian energy companies are in the midst of revamping their strategies, but deals – both in the form of outright takeovers and asset sales – have been slow since buyers are reluctant to pay up.
Talisman, for example, has also turned down offers for some of its Duvernay assets, saying it would rather find partners than accept a low-priced sale. Canadian Natural Resources Ltd. also recently rejected offers for some of its assets.
“GDF offered a low-ball price for Talisman’s best assets, so there was a very small chance it would work out,” one source told the newswire.
Talisman made room on its board for two representatives from activist investor Carl Icahn’s firm in December. Samuel Merksamer joined the board on Dec. 1 and Jonathan Christodoro joined at a board meeting on Dec. 6, according to Talisman spokesman Brent Anderson. This means Mr. Icahn may have been aware of outside interest in Talisman if any asset or takeover offers came in December.
Mr. Ichan, who amassed roughly 7 per cent of Talisman’s stock last fall, in regulatory filings said he is interested in boosting the energy company’s value through asset sales, an outright takeover or other methods. Reuters’s sources said Talisman and GFD have not been in touch since Talisman rejected the deal in December.
Talisman’s Mr. Anderson declined to comment on the Reuters report. Talisman’s stock climbed on the report, closing at $12.83 (Canadian), up 27 cents, or 2.15 per cent, on the Toronto Stock Exchange Monday.
A $17-billion (U.S.) takeover offer suggests a bid of around $11 a share, factoring in Talisman’s net debt of roughly $6-billion, said Michael Dunn, analyst at FirstEnergy Capital Corp. Mr. Dunn said he had not heard of formal offers for the company in the more than a year it has been selling assets and cutting costs in a restructuring under Mr. Kvisle’s tenure as Talisman’s CEO.
“If you look at the history of oil and gas you rarely see a company’s board accept a bid at the market price, if that’s indeed what happened,” Mr. Dunn said.
Mr. Kvisle, a stalwart of Alberta’s oil patch, moved from Talisman’s board to the corner office in September, 2012, replacing John Manzoni. Mr. Kvisle said he would step down after he is satisfied the company is healthy again.
Mr. Kvisle has been picky. The company chose to hang on to assets in the northern part of the Duvernay after the bids it received – Talisman did not publicly disclose any details – were deemed insufficient. It is also struggling to offload its North Sea assets.