Drilling Firm Noble to Acquire Competitor Diamond Offshore

US offshore drilling rig operator Noble Corp has made headlines with its recent announcement to acquire smaller rival Diamond Offshore in a cash and stock deal worth approximately $1.59 billion. This strategic move comes amidst a period of consolidation within the global oil and gas sector, with major players like Chevron and Exxon engaging in similar acquisition activities.

The acquisition will see Noble paying $15.52 per Diamond Offshore share, with a portion of $5.65 in cash and the remainder in Noble stock. This deal represents an 11.4% premium to Diamond Offshore’s closing stock price from the previous Friday. Once the acquisition is finalized, Diamond shareholders will hold about 14.5% of Noble’s outstanding shares.

The merger between Noble and Diamond will create a combined order backlog of $6.5 billion, with anticipated annual pre-tax cost savings of $100 million. Noble’s President and CEO, Robert Eifler, highlighted the benefits of the merger, noting the strengthening of the company’s offerings with top-of-the-line drillships and rigs like the Ocean GreatWhite.

Mr. Eifler also emphasized the operational success of Diamond Offshore’s rigs, with high utilization rates over the past few years and strong forward contract coverage. The merger is expected to be immediately accretive to free cash flow per share and contribute to accelerated growth in return of capital to shareholders.

Diamond Offshore’s President and CEO, Bernie Wolford, described the merger as a “natural match” for the Houston-based firm. Noble plans to finance the cash portion of the transaction through new debt financing, secured by a $600 million committed bridge financing facility.

As the energy sector continues to witness significant transformations through consolidations and strategic acquisitions, Noble’s acquisition of Diamond Offshore marks a significant milestone in the industry’s landscape. With a promising outlook for cost savings and operational synergies, this merger is poised to shape the future trajectory of both companies in the offshore drilling market.