US offshore drilling rig operator Noble Corp has announced it will acquire smaller rival Diamond Offshore in a cash and stock deal worth around $1.59 billion (£1.25bn).
In a statement, the two companies said Noble will pay $15.52 per Diamond Offshore share, with $5.65 of that amount in cash and the rest in Noble stock.
Noble’s acquisition of Diamond comes as the global oil and gas sector continues its wave of consolidation, with recent US deals involving Chevron and Exxon.
Meanwhile, Harbour Energy is in the process of buying out German rival Wintershall Dea while Ithaca Energy recently announced a merger deal with Italian firm Eni.
Noble said the deal represents an 11.4% premium to closing stock price from last Friday.
Upon closing, Diamond shareholders will own approximately 14.5% of Noble’s outstanding shares.
Noble and Diamond merger
The merger will see a combined order backlog of $6.5 billion between the two companies, and Noble said it expects to realize annual pre-tax cost savings of $100 million, with 75% expected to be realized within one year of closing.
Noble president and chief executive officer Robert Eifler said the deal will strengthen the company’s offering, with four seventh generation drillships and “one of the most high-spec harsh environment semisubmersible rigs in the world” in the Ocean GreatWhite.
© Supplied by Diamond Offshore“Additionally, Diamond’s five conventional deepwater and midwater rigs have averaged above 85% utilization over the last 3 years and currently have strong forward contract coverage,” Mr Eifler said.
“Supported by Diamond’s $2.1 billion of backlog and $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.”
Diamond Offshore president and chief executive officer Bernie Wolford said the merger with Noble is a “natural match” for the Houston-based firm.
Noble said intends to fund the cash portion of the transaction through new debt financing, secured through a $600 million committed bridge financing facility
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