Talisman Snubs “Low Ball” Takeover Bid

GDF Suez tries to get a deal at $17 billion.

The Motley Fool

It has recently come to light that Talisman Energy Inc. (TSX:TLM, NYSE:TLM) has rejected a US$17 billion takeover offer from French-owned GDF Suez. The deal rejected by the Talisman board included all $6 billion of debt along with the company and its assets.

The company called this a “low ball” offer that was around  $1.50 per share below its average price in December (low $12.16, high $12.99). It believes that $17 billion is not enough for a company with $20.2 billion in assets, including $10.8 billion in property, plants and equipment.

Talisman also rejected a counter offer from GDF Suez for a portion of the company. This gives backing to company sentiment that “it would rather find partners than accept a low-priced sale”.

GDF Suez was hoping that along with its Chinese partner, CIC, it could muster up enough capital to pull off a major acquisition like Talisman. Some bankers have expressed concern that a deal like this could be a financial stretch for the company, which is already sitting at 30 billion euros of debt.

Foolish bottom line 

News of the rejected offer pushed Talisman’s stock up 2.15% to $12.83 a share on Monday. By rejecting this bid Talisman has underscored its commitment to “sweeping reorganization” to rebuild the company, which has had a rough few years.

In the first three quarters it posted a net income loss of $170 million, which is an improvement from the loss of $240 million in that same time period in 2012. Time will tell whether Talisman can continue its turnaround or become bait for another takeover bid.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Cameron Conway does not own any shares in the companies mentioned.

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