Talisman Energy CEO Replaced As Takeover Speculation Swirls

Talisman Energy CEO Replaced As Takeover Speculation Swirls

Talisman Energy CEO Replaced As Takeover Speculation Swirls

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Talisman Energy Inc. (TXS:TLM) (NYSE:TLM) announced on Monday that its president and chief executive, John A. Manzoni, has accepted to step down from his posts, effective immediately. The announcement came before the markets opened, surprised analysts, and fuelled speculation that the Calgary-based company is now up for sale

The Canadian based firm, saw its shares jump 45 Canadian cents, or 3 percent, to C$14.32 on the Toronto Stock Exchange after the announcement. Before today, the same shares have been worst performing among the peer group in relation to expected cash flow.

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Talisman Energy Inc. (TXS:TLM) (NYSE:TLM), one of Canada’s largest oil & gas companies by market capitalization, has been struggling with the industry wide downturn in natural-gas prices. The Calgary oil-and-gas company has been discussing a possible takeover for quite some time now. It has not been a good year for the oil and Gas Company, as one of its platforms in North Sea suffered various construction setbacks.

Talisman Energy Inc. (TXS:TLM) (NYSE:TLM), which produces oil and gas in North America, the North Sea and Southeast Asia, replaced John A. Manzoni with former TransCanada Corporation (NYSE:TRP) (TSE:TRP) CEO Hal Kvisle, who led the country’s biggest pipeline company, from 2001 to 2010.

Since September 2007, when Manzoni a former BP plc (NYSE:BP) (LON:BP) executive, took charge from the more outspoken Jim Buckee, shares have dropped approximately 23 percent. Jim Buckee is notorious for venturing in too many operating regions around the world, but without much success. However, since late June stock has gained 21 percent.

The change in management comes at a crucial juncture of takeovers in the Canadian energy sector. Recently China’s CNOOC Limited (NYSE:CEO) (883) has made a $15.1 billion bid for Nexgen Inc.(NXY), which like Talisman has been struggling with its operating and financial problems. Many experts have already named Talisman as a potential takeover target by many Chinese or other Asian state-owned oil company, as China’s Sinopec Shanghai Petrochemical Co. Ltd. (HKG:0038) (NYSE:SHI) bought a 49 percent stake in Talisman’s North Sea assets on the same day that  CNOOC Limited (NYSE:CEO) (883) announced its bid for Nexgen Inc.(NXY).

“I think it confirms that the company is up for sale,” said Barry Schwartz, vice-president and portfolio manager at Baskin Financial Services. “They already have a JV with Sinopec Shanghai Petrochemical Co. Ltd. (HKG:0038) (NYSE:SHI), and they would be a logical buyer. Talisman has a number of non-North American assets.”

However an analyst from CIBC World Markets Andrew Potter, considers the appointment of Kvisle as its permanent CEO a long term plan. “Overall, we believe, regardless of whether TLM is open to a corporate sale, they will likely still first continue the short-term focus on rationalizing assets, which should be positive for the stock,” Potter said in a note to clients. “If this process does not yield significant value to shareholders, this could lead to the company pursuing more meaningful portfolio shifts or an outright sale.”

Barclays and Bank of America Merrill Lynch also do not expect much change, and have maintained their current rating on he company.

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Aman is MBA (Finance) with an experience on both Marketing and Finance side. He has worked as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, reviewing tech gadgets, playing PC games and cricket. - Email him at amanjain@valuewalk.com
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