Spain's Repsol buys Canada's Talisman for $8.3 billion

CIARAN GILES, Associated Press

Repsol S.A. said Talisman's incorporation will increase Repsol's output by 76 percent to 680,000 barrels of oil equivalent per day.

MADRID (AP) — Spanish energy company Repsol is buying Canadian oil firm Talisman Energy for $8.3 billion, a combination that would be among the 15 largest privately owned oil and gas companies in the world, Repsol said Tuesday.

Repsol S.A. said Talisman's incorporation will increase Repsol's output by 76 percent to 680,000 barrels of oil equivalent per day, and boost reserves by 55 percent.

The company said the deal has been approved by the boards of both companies. The transaction is subject to the approval of the Canadian courts and Talisman shareholders, and is expected to be complete in mid-2015.

Repsol said it would also take on $4.7 billion of Talisman debt.

The group will be present in more than 50 countries with over 27,000 employees.

"This is truly a transformational operation for Repsol," Chief Executive Officer Josu Jon Imaz told a news conference. "It's a good deal at the right time."

Imaz said the deal ended a 15-month search for acquisitions and will be financed mainly with Repsol's cash reserves.

A Repsol statement said it marked the culmination of a transformation process following Argentina's 2012 nationalization of YPF energy company, in which Repsol had a majority stake. Repsol said earlier this year that it earned $6.3 billion in bond and share sales on finally extricating itself from the Argentine company.

The company said the Talisman shareholders were being offered $8 (6.40 euros) per share, representing a 24 percent premium over the average share price of the last three months. It said Talisman's shares closed at $4.29 in New York on Friday.

Repsol said the deal would consolidate the exploration and production unit as the company's main growth segment in the coming years. Capital employed in this sector will represent 56 percent of the total, compared to a current 35 percent.

Repsol's shares were down 2 percent at 15.4 euros in midday trading in Madrid.

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