Why The Repsol-Talisman Energy Deal Might Be Similar To Dot-Com Bubble Era Deals
Repsol SA (ADR) (OTC: REPYY) announced recently that it will be acquiring Canada-based Talisman Energy Inc. (USA) (NYSE: TLM) in a $3.8 billion deal, following which shares of Talisman Energy opened Tuesday up over 47 percent.
CNBC's David Faber broke down the deal and Jim Cramer provided his insights on it.
"Canada's Talisman Energy this morning agreeing to be acquired by Spain's Repsol, $8.3 billion, $8 a share in cash. Repsol says the deal would boost its oil production by 76 percent, increase its reserves by 55 percent. The transaction expected to close by mid-2015," Faber said.
Drawing Parallel With The Dot-Com Bubble
Cramer compared the deal with the deals that happened after the dot-com bubble burst in 2000, saying, "In 2000, a few months after the top, he [Bod Davis, General Partner, Highland Capital Partners] had a company called Lycos. Now what happened with Lycos? A Spanish company not unlike Repsol, this Spanish company was called Terra. It paid $12.5 billion for Lycos in 2000 and then it was sold to the South Koreans in 2004 for $95 million."
He continued, "I'm calling Repsol early. I think Repsol is way early with Talisman because I go back to 2000 and I look exactly how dumb Terra was, now maybe Repsol is a better company, but that was the top and you were buying. I think that's too early."
Cramer emphasized that it might be too early for companies in the oil sector to be looking for acquisitions right now and "there’s nothing wrong with waiting."
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