Spanish oil major Repsol is exploring a bid for Talisman Energy as it looks to deploy cash it received as compensation for the loss of its stake in Argentina’s YPF, according to people familiar with the matter.
The company identified Talisman as a top target and is working with financial services firm JPMorgan Chase & Co. as it evaluates the deal, one of the people said, asking not to be identified discussing private matters.
Repsol is considering acquisitions as it seeks growth outside its home market.
Talisman, based in Calgary, has a market value of about $10.2billion based on yesterday’s closing price. The company, which was targeted by billionaire investor Carl Icahn, is seeking to sell assets to cut debt and focus its capital on a smaller number of core assets.
A spokesman for Madrid-based Repsol declined to comment, as did representatives for Talisman and JPMorgan.
Repsol chief financial officer Miguel Martinez said in May that the company, which is valued at about $34billion, is looking for targets that offer a “growth platform” and are based in more stable countries than most of its current overseas operations.
Its biggest purchase so far, the more than $15billion acquisition of Argentina’s YPF in 1999, ended with the Argentine government’s seizure of a 51% stake in the company in 2012.
In May this year Repsol received and then sold about $5billion of bonds from Argentina in compensation for the nationalization of the stake.
In the same month, the company made a further $1.3billion from the sale of the 12% it still held in the Argentine gas and oil producer.
The $6.3billion from YPF adds to the roughly $7.1billion that Repsol held in cash and equivalents at the end of the first quarter.
Repsol has said it may spend as much as $10billion on deals, and any acquisition would probably be in the US, Canada or other developed markets, such as northern Europe.
Spanish newspaper Expansion earlier reported that Repsol was working with JPMorgan to evaluate potential targets.
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