- Noble Corp. (NYSE:NE) will acquire Diamond Offshore Drilling Inc. (NYSE:DO) in a stock-and-cash transaction valued at US$1.6 billion
- Under the terms of the definitive merger agreement, Diamond Offshore shareholders will receive 0.2316 shares of Noble along with a cash payment of US$5.65 per share
- The combined entity will boast a fleet of 41 rigs, composed of 28 floaters and 13 jackups
- Noble Corp. last traded at US$42.60 per share
Noble Corp. (NYSE:NE) will acquire Diamond Offshore Drilling Inc. (NYSE:DO) in a stock-and-cash transaction valued at US$1.6 billion.
The deal is one of many ongoing consolidation trends in the oil and gas industry as companies seek to enhance operational efficiencies and expand their market reach.
Under the terms of the definitive merger agreement disclosed on Monday, Diamond Offshore shareholders will receive 0.2316 shares of Noble along with a cash payment of US$5.65 per share for each Diamond stock share they hold. This translates to a total consideration of US$15.52 per share, reflecting an 11.4 per cent premium over Diamond’s closing share price on June 7.
Noble intends to finance the cash component of the acquisition through new debt, secured via a US$600 million committed bridge financing facility. This financial arrangement aims to ensure Noble’s capability to meet its obligations without impacting its liquidity adversely.
The combined entity will boast a fleet of 41 rigs, which are composed of 28 floaters and 13 jackups. This merger aligns two companies with highly complementary fleets and customer bases, anticipating significant cost synergies. The combined backlog is projected at approximately US$6.5 billion, offering a robust pipeline of projects with diverse clients and geographical operations.
“This acquisition enables Noble to continue our journey of delivering superior innovation and value to a broad range of the leading offshore operators across the world. Our position will be strengthened with the addition of four seventh-generation drillships and one of the most high-spec harsh environment semisubmersible rigs in the world,” Noble’s president and chief executive officer, Robert Eifler, said in a news release. “Diamond’s five conventional deepwater and midwater rigs have averaged above 85 per cent utilization over the last three years and currently have strong forward contract coverage. Supported by Diamond’s US$2.1 billion of backlog and US$100 million of anticipated cost synergies, we expect the transaction to be immediately accretive to our free cash flow per share and contribute to accelerated growth in our return of capital to shareholders.”
This merger announcement comes at a time when the oilfield services sector is witnessing a wave of consolidations, driven by the need for enhanced operational efficiency and strategic expansion amidst fluctuating oil prices and evolving market dynamics.
The merger is contingent upon customary closing conditions, including regulatory approvals and the consent of Diamond Offshore shareholders. Both companies aim to finalize the transaction by Q1 2025.
Noble Corp. is an offshore drilling contractor for the oil and gas industry. The company operates under one segment namely, Contract Drilling Services. The fleet consists of around 19 drilling rigs consisted of seven floaters and 12 jackups.
Noble Corp. (NYSE:NE) last traded at US$42.60 per share.
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(Top photo: Noble Corp.)
