US oil and gas drilling company Noble has signed a definitive agreement to acquire Diamond Offshore Drilling in a cash and stock deal.
Under the terms of the agreement, Diamond shareholders are set to receive 0.2316 shares of Noble and an additional $5.65 per share in cash for each Diamond share they hold.
This offer represents an 11.4% premium on Diamond's closing stock price as of 7 June 2024.
According to Reuters, the deal is valued at approximately $1.59bn.
Upon completion of the merger, Diamond's shareholders will hold around 14.5% of Noble's outstanding shares.
The combined fleet of the merged entity will include 28 floaters and 13 jack-ups, enhancing Noble's operational capacity.
Meanwhile, the combined backlog for Noble and Diamond is estimated at $6.5bn, with Diamond contributing $2.1bn as of 10 June 2024.
This merger is expected to create a diverse customer base and operational footprint for Noble.
Noble anticipates annual pre-tax cost synergies of $100m, the majority being realised within the first year post-closing.
The acquisition is expected to be immediately accretive to Noble's free cash flow per share and will support Noble's strategy to enhance shareholder returns.
Following the closure of the deal, Noble's board of directors will expand to include one member from Diamond's board.
Noble president and CEO Robert Eifler said: "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 drill-ships and one of the most high-spec harsh environment semi-submersible rigs in the world.
“Additionally, Diamond's five conventional deep-water and mid-water rigs have averaged above 85% utilisation over the last three years and currently have strong forward contract coverage.”
Diamond president and CEO Bernie Wolford said: "This combination is an ideal outcome that provides Diamond shareholders both immediate and long-term upside potential as part of a more fully scaled platform that can deliver customer and shareholder value on a through-cycle basis, more visibly and accessibly, while gaining access to Noble's robust dividend programme.
“Noble's operational strength, service posture and proven integration capabilities make this a natural match for Diamond.”
Both companies' boards have unanimously approved the transaction, which is now subject to customary closing conditions including regulatory approvals and the nod from Diamond's shareholders.
The deal is projected to close by the first quarter of 2025.
This acquisition is part of a broader trend of consolidation in the oil and gas drilling sector.
Recently, ConocoPhillips reached an agreement to acquire Marathon Oil, aiming to strengthen its US onshore portfolio.
