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Carl Icahn takes big stake in Talisman Energy

Investor Carl Icahn.

CHIP EAST/REUTERS

Carl Icahn, the renowned activist shareholder, has snapped up nearly 6 per cent of Talisman Energy Inc. and hinted he may seek to push the Canadian oil producer to put itself up for sale or accelerate its restructuring plan.

Mr. Icahn, who has acquired high-profile positions or pushed for corporate revamps at such companies as Apple Inc., Dell Inc. and Motorola, used the social media site Twitter to disclose he had purchased 61 million shares of Talisman and may have discussions with the executives about "strategic alternatives, board seats, etc."

The revelation came after days of speculation that an activist shareholder was buying up a position in the company, which had lifted the stock about 11 per cent since the start of the month. Mr. Icahn made his position known after the market closed; the stake is worth $802-million. Officials with his company, Icahn Enterprises L.P., were not immediately available for comment.

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Talisman shares were trading up about 4 per cent in early going in Toronto, but quickly gave back much of those gains as the session continued.

Analysts and investors have noted that Talisman's overhaul, which started with the appointment of oil patch veteran Hal Kvisle as CEO more than a year ago, was taking longer than expected. Some have suggested the company could be split up as a way to boost share value.

The arrival of an aggressive activist such as Mr. Icahn merely adds to the pressure.

Under Mr. Kvisle, Talisman is seeking to sharpen its focus on two main development areas, shale oil and gas plays in the Americas and offshore oil in Southeast Asia, as well as a few exploration plays. It has placed several assets on the auction block with the aim of raising as much as $3-billion (U.S.).

In a statement, Talisman said it was open to talks with the financier. "We appreciate constructive input from shareholders and take their views seriously. We are committed to acting in the best interests of the company and give due consideration to constructive recommendations for strategies or actions that have the potential to increase shareholder value," spokeswoman Phoebe Buckland said in an e-mail.

Mr. Icahn's interest would make him the second-largest shareholder, behind fund management giant Franklin Templeton and just ahead of BlackRock, UBS and Jarislowsky Fraser, according to Bloomberg data. He has recently turned to Twitter to announce his positions in companies as well as to make economic and financial observations.

His position will only hasten a split-up or sale of Talisman, said Canaccord Genuity analyst Phil Skolnick, who has predicted for months that the company has been headed in such a direction as it added new board members and put assets up for sale.

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Mr. Kvisle is hoping to divest interests in the North Sea, a Colombian oil pipeline and Northeast British Columbia natural gas properties, though he has acknowledged that the market for asset deals is weak. He has done so in response to complaints that Talisman's assets were widely spread across too many operating regions.

"It's taking too long, and I think investors aren't seeing that as real focus. They continue to miss quarterly results," Mr. Skolnick said.

One person familiar with Talisman's plans said at least one Chinese oil and gas company has expressed interest in some of the properties Mr. Kvisle has deemed as core, but the company has been seeking to sell other, less valuable properties first before considering any bids for the crown jewels.

In a note issued earlier on Monday, TD Securities analyst Menno Hulshof warned that the company's portfolio of assets may still be too complicated for an activist investor to mastermind a corporate split.

Jim Hall, chairman and and chief investment officer at Mawer Investment Management, said Mr. Icahn may have bought in to take advantage of the potential stock gains of a company that was headed in the direction of a major restructuring anyway.

With a file from Jacquie McNish.

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About the Author
Mergers and Acquisitions Reporter

Jeffrey Jones is a veteran journalist specializing in energy, finance and environment for The Globe and Mail’s Report on Business, based in Calgary. Before joining The Globe and Mail in 2013, he was a senior reporter for Reuters, writing news, features and analysis on energy deals, pipelines, politics and general  topics. More

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