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.