Activist investor Carl Icahn said he has taken a 5.97 percent stake in Canadian energy producer Talisman Energy Inc. and may seek talks with management.
Icahn has acquired 61.6 million shares, including options, of the Calgary-based company, according to a filing today. Icahn may have conversations with management regarding “strategic alternatives, board seats, etc.,” he said today in a post on Twitter.
“The question is what he brings to the table,” Sameer Uplenchwar, managing director at Global Hunter Securities in Calgary, said today in a telephone interview. “It’s a buyer’s market right now. And historically investor activism hasn’t always worked well in Canada.”
The purchase by Icahn comes as Chief Executive Officer Hal Kvisle is targeting sales or joint ventures for Talisman’s assets in Asia, the North Sea and North America. The company “could” be split, and selling North Sea assets would be a first step in focusing on North America, Kvisle said in May.
The filing was released after regular trading ended in New York, where Talisman rose 7.5 percent to $13.70 at 6:30 p.m. The shares, which gained 13 percent this year through today’s close, have dropped 27 percent in the past three years amid slumping natural gas prices.
Icahn helped stir changes at Chesapeake Energy Corp. that included last year’s hiring of a new chairman, Archie Dunham, and the exit this year of Chief Executive Officer Aubrey McClendon amid questions about the CEO’s management of the oil and natural gas producer. Icahn also owns stakes in biotechnology, scrap metal and auto-parts manufacturing.
At Transocean Ltd., Chairman Michael Talbert departed and the company reinstated its dividend, as well as planned cost cuts and more debt repayments, after it was announced earlier this year that Icahn had taken a stake in the world’s largest offshore rig contractor.
Kvisle, who took over as Talisman’s CEO a year ago, has pledged to make Talisman a “better performer.”
Talisman produces from five gas regions in North America, including the Montney and Duvernay formations, and operates internationally, with projects in the North Sea off the U.K. and Norway as well as in Indonesia.
Talisman sold a 49 percent stake in its U.K. unit to China Petrochemical Corp. for $1.5 billion last year. Sinopec has a veto over a possible successor to Talisman if the Canadian company sells its stake, Uplenchwar said, adding that such a condition makes a sale of the assets more difficult.
Talisman also has holdings in Alberta’s Duvernay formation where companies are drilling gas that’s rich in petroleum liquids, which sells for higher prices. Exxon Mobil Corp., the world’s largest energy company by market value, agreed to buy Duvernay holder Celtic Exploration Ltd. in October, and Chinese state-owned PetroChina Co. acquired a 49.9 percent stake in Encana Corp.’s Duvernay acreage.
Icahn’s purchase may be a distraction for management, said Jennifer Stevenson, a vice president and portfolio manager with Dynamic Funds.
“The course they’ve already stated is to maximize value for shareholders,” said Stevenson, who helps manage C$100 billion and doesn’t own Talisman shares. “Now you have a shareholder that wants something, I’m guessing wants something more quickly. I think it could definitely speed up the process. But some processes just take time.”
Canadian companies faced 42 cases of shareholder activism in 2012, almost double the number in 2011, according to Kingsdale Shareholder Services Inc., a firm involved in 85 percent of Canadian proxy fights. In February, Kingsdale Chief Executive Officer Wes Hall predicted there would be even more in 2013.
Activist hedge funds including Barry Rosenstein’s Jana Partners LLC and William Ackman’s Pershing Square Capital Management LP have pressed Canadian companies to change management or spin off parts of their businesses.