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A handout photo from Talisman Energy.

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Repsol SA's evaluation of Talisman Energy Inc.'s problematic North Sea operations, coupled with collapsing oil prices, knocked a potential $5.2-billion (U.S.) off the value of its takeover offer for the Canadian company within five months of on-again, off-again talks, according to newly issued deal documents.

Repsol presented a non-binding agreement at $13 a share to Talisman on July 14, 2014, according to details contained in the information circular dated Jan. 13, 2015. That offer – and others discussed before and after – was subject to further due diligence. Repsol and Talisman in December stuck a takeover deal for $8 a share.

The Spanish company's final offer ended years of uncertainty for Talisman, which was trying to clean up its sprawling assets and dinged-up balance sheet under chief executive Hal Kvisle. Talisman made progress by selling assets, but the company's struggling joint venture project in the North Sea made Repsol nervous. Repsol walked away from three of its own proposals between July and September as it dug into details about Talisman's North Sea operation. This came as energy prices plummeted, diminishing the value of oil and gas companies around the globe.

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Talisman considered a number of alternatives before reaching a deal with Repsol. It mulled spinning off its Asia-Pacific operations through an initial public offering, for example. The company reviewed the possibility of selling chunks of its Asia-Pacific projects, as well as striking a deal with private equity firms to finance its operations there. Talisman received an unsolicited offer for most of its Asia-Pacific operations and its assets in Norway in December, 2013, and again from a different suitor in April, 2014, the document reveals.

Talisman also negotiated with two companies over selling the Canadian company's stake in its challenged North Sea project. Talisman and China's Sinopec are partners on the project, dubbed Talisman Sinopec Energy UK Ltd. (TSEUK).

Repsol and Talisman started to explore a variety of deals in November, 2013. On July 3, 2014, Repsol representatives made a verbal takeover proposal for $12.50 a share. The foreign company followed up on July 14, 2014, with a $13-a-share offer in writing. It was non-binding. The Spanish outfit conducted due diligence between July 16, 2014, and Aug. 1, 2014, in London and Calgary.

Repsol was not impressed by Talisman's TSEUK joint venture.

Talisman on July 28, 2014, received a letter from Repsol "confirming its continued interest in completing a corporate transaction at $13.00 per share," said the information circular, which was filed with securities regulators Wednesday. "However, Repsol noted that complexities with respect to [Talisman's] investment in TSEUK would need to be understood and resolved prior to entering into an arrangement agreement."

Repsol backed out Aug. 1, 2014. It sent Talisman a letter saying so.

Repsol's chairman, Antonio Brufau, and Mr. Kvisle, discussed the foreign company's concerns. Repsol was worried about the Talisman's investment in the joint venture – a project Mr. Kvisle bluntly admits suffers major operational problems and comes with substantial financial liabilities. Repsol also had "relationship considerations" pertaining to Sinopec because the Spanish firm works with the Chinese company elsewhere.

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"Accordingly, the ability of [Talisman] to finalize a transaction with Repsol at the price proposed no longer existed," the information circular says. "[Talisman] subsequently closed access to its electronic data room and, pursuant to the terms of the confidentiality agreement, requested that all materials be returned or destroyed by Repsol."

But Repsol came back in late August. Negotiations resumed Sept. 4, 2014. Senior executives from both companies discussed alternatives, including Repsol buying just parts of Talisman. That idea was ditched, too. Negotiations, however, did not stop.

On Sept. 18, 2014, Mr. Brufau in a phone call with Mr. Kvisle said Repsol would pay $11.50 a share. Repsol, however, backed out of its own offer. Talisman again considered alternatives, including splitting up the company. Another company – Talisman will not say which – made overtures to the Canadian company.

Repsol was back Nov. 19, 2014, with its $8 offer. Talisman's stock rallied as news of a potential deal leaked. Finally, on Dec. 16, Repsol and Talisman made it official: Canada's troubled company was sold for $8 a share and Mr. Kvisle could return to retirement.

Meanwhile, Talisman shareholder James Baqleh is suing in New York state Supreme Court in Manhattan to stop the takeover, saying the offer price is "grossly inadequate" and Talisman shareholders would be "irreparably damaged" if it's completed, according to court filings.

With files from Bloomberg

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