Noble Corp., the world’s largest offshore oil-rig contractor by market worth, agreed to purchase its smaller rival Diamond Offshore Drilling Inc. in a deal valued at $1.6 billion.
Diamond stockholders will obtain 0.2316 share of Noble plus $5.65 for every share they personal, an 11.4 p.c premium primarily based on the June 7 closing value, in response to a press release Monday. When the deal closes, Diamond shareholders will personal about 14.5 p.c of Noble’s excellent shares.
The deal comes as offshore drilling is poised to increase within the years forward as development in US shale basins ebbs. Noble shares rose 1.5 p.c at 9:30 a.m. New York. Diamond, primarily based in Houston, rose 10 p.c.
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“Actually what this does it it provides the mixed firm higher scale and a greater skill to serve prospects on a worldwide foundation,” Noble Chief Govt Officer Robert Eifler advised analysts and traders Monday on a convention name. “We’ll add some useful scale in Brazil and elsewhere.”
Shopping for Diamond suits Noble’s technique of going after the largest offshore oil contractors world wide with among the latest deepwater rigs. The mixed firm will boast the largest collection of top-tier drillships that carry a pair of so-called blowout preventers, a key security merchandise for drilling in water greater than two miles deep.
The offshore business, significantly in deepwater, is anticipated to thrive within the coming years because the shale business matures and oil producers search for new sources of provide. SLB, the world’s largest oil-services supplier, has mentioned it sees the potential for greater than $100 billion in remaining funding selections for world offshore initiatives each this yr and subsequent.
Noble, primarily based in Sugar Land, Texas, will fund the money portion of the deal by a $600 million bridge mortgage. The corporate plans to broaden its board to incorporate one member from Diamond.
Eifler, who took over as CEO of Noble months earlier than the drilling contractor filed for chapter throughout the begin of the Covid-19 pandemic, mentioned regulatory approvals to purchase Diamond needs to be extra simple in comparison with its $2 billion deal for rival Maersk Drilling in 2022, an acquisition that took nearly a yr to shut.
Noble additionally mentioned its board authorized a 25 p.c improve in its quarterly dividend to $0.50 per share, beginning within the third quarter.
Morgan Stanley & Co. was Noble’s lead monetary adviser, and Paul, Weiss, Rifkind, Wharton & Garrison LLP was its authorized adviser. Guggenheim Securities LLC and TPH & Co. had been monetary advisers to Diamond, whereas Kirkland & Ellis LLP was its authorized adviser.
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