Talisman Energy said Thursday it is buying Paladin Resources Plc of Britain for $2.52 billion cash in a friendly takeover.

Paladin has production and exploration assets predominantly in the Norwegian, U.K. and Danish sectors of the North Sea, as well as in Australia, Indonesia and Tunisia. The company also has exploration territory in Gabon and Romania.

Investors sent shares of Talisman down almost 9 per cent amid a big sell-off in oil stocks. The stock closed down $4.75 at $49.05 on the TSX.

"This is an attractive opportunity for Talisman and is a logical continuation of Talisman's successful business model," said Jim Buckee, Talisman's president and CEO.

"It is rare to have the opportunity to acquire a set of properties with the fit that we see here in the U.K. Central North Sea and Norway," he said.

Talisman (TSX:TLM) expects the Paladin deal will help its production per share growth to exceed 10 per cent annually from 2006 through 2008. Talisman also estimated that Paladin's proven and probable reserves are about 190 million barrels of oil equivalent (boe).

Paladin recently reported production of about 46,000 boe per day through the first half of 2005, with the possibility of production rising to more than 70,000 boe per day in 2009.

Based in Calgary, Talisman has operations in the North Sea, Indonesia, Malaysia, Vietnam, Algeria, Trinidad and Tobago, and the United States. Talisman's subsidiaries also operate in Colombia, Qatar and Peru.