Talisman Energy Inc., the Canadian energy company targeted by Carl Icahn, agreed to appoint two board members backed by the billionaire activist investor to head off a proxy fight.
Samuel Merksamer and Jonathan Christodoro will join the board this month and will be on the company’s slate of board nominees for election next year, according to a filing from the Calgary-based oil and natural gas producer today. In exchange, Icahn agreed not to conduct a proxy contest at the next Talisman annual meeting.
Activists from Icahn to Barry Rosenstein have pushed for changes at energy companies they believe have failed to realize the value of reserves. Icahn, who holds a 7.4 percent stake in Talisman, said in October he may seek talks with management on “strategic alternatives” and board seats. The agreement with Talisman is Icahn’s second in a month with an energy company -- rig contractor Transocean Ltd. said Nov. 11 it will pay a higher dividend and add another Icahn board nominee.
“I strongly believe in the potential of Talisman and I’m pleased to have reached this constructive outcome,” Icahn said in a joint statement with the company today. Talisman rose 4.5 percent to C$12.99 at the close in Toronto, the biggest increase since Oct. 7.
One of the new directors will sit on a committee to decide the next chief executive officer, replacing Hal Kvisle, who said last month he’ll leave before the end of next year. Kvisle, who became CEO in September 2012, is seeking to shrink Talisman, which operates on six continents, to focus on the Americas and Southeast Asia.
Last month, the producer agreed to sell part of its Montney acreage to Malaysia’s Petroliam Nasional Bhd for C$1.5 billion ($1.4 billion). Talisman is targeting $2 billion to $3 billion in divestitures by mid-2014 to reduce debt and cut costs after North American gas prices fell to a 10-year low last year.
The added Icahn directors may help speed the company’s asset-sale and debt-reduction program, David Neuhauser, who manages $100 million including Talisman shares at Livermore Partners Inc. in Northbrook, Illinois, said in a phone interview today.
“It’s very refreshing to see the board is open to having new blood,” said Neuhauser. “Icahn’s history speaks loudly. He doesn’t come into a position like this to sell his shares in six months and move on.”
Talisman’s agreement with Icahn is “incrementally positive,” Greg Pardy, an analyst at RBC Capital Markets in Toronto who rates the stock the equivalent of a hold, wrote in a note to clients today.
Merksamer and Christodoro are managing directors of Icahn Capital LP, a subsidiary of Icahn Enterprises LP. Kevin Dunne will retire from the board, leaving 14 members, Talisman said.