Aberdeen-headquartered KCA Deutag has announced a $550m deal to acquire the onshore drilling business of Italian contractor Saipem.
Expected to close in the fourth quarter of this year, the deal will also see Saipem also take a 10% stake in KCA Deutag.
Once complete, the combination with KCA will create a “leading global onshore drilling business”, with 11,000 employees globally and more than 50% of its EBITDA from the Middle East.
Total backlog will increase by $1.6bn to $7.2bn, the Aberdeen firm said.
Joseph Elkhoury KCA Deutag CEO said: “This milestone acquisition of Saipem Onshore Drilling allows us to significantly upgrade our business by expanding in core geographies in the Middle East and key markets in Europe and Latin America.
“I want to thank our shareholders and both Boards for their support and extend my genuine gratitude to all those involved to deliver this transaction for their unrelenting resilience despite the challenging markets and recent adversity.”
Saipem Onshore Drilling generated revenues of $410m in 2021, on EBITDA of $98m from its business in Middle East, Latin America and other markets
Meanwhile KCA had revenues of $1.2bn and EBITDA of $237m in the same period.
Some $24min cost synergies are expected to be created through the deal.
Barclays and Houlihan Lokey acted as financial and debt advisors respectively to KCA Deutag on the transaction.
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