Transocean Buys Valaris for $6 Billion, Creating New Industry Leader
Offshore drilling company Transocean has struck a deal to acquire competitor Valaris for $6 billion in stock, giving Transocean shareholders a 53 percent stake in the combined company.
The transaction creates the largest drilling company in the world, valued at $17 billion. It will operate 33 ultradeepwater drillships, nine semisubs and 31 jackups - 73 rigs in total - across global markets. Transocean CEO and President Keelan Adamson suggested that the combination makes for "a very attractive investment" in offshore drilling, with the "best fleet, proven people, leading technologies and unequaled customer service."
Both companies' boards have approved the deal, and it is expected to close in the second half of the year. It should create about $200 million in identified cost synergies, and the firm expects to have enough cash flow to pay down its debt to a leverage ratio of 1.5x by about 2028.
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The addition of Valaris brings jackup operations back into Transocean's portfolio of services. The company sold its previous jackup fleet to Borr Drilling nine years ago for $1.4 billion, reflecting the prevailing pricing for equipment during the late-2010s offshore downturn. The new merger agreement with Valaris creates a "combined company that is capable of operating any rig at any water depth in any offshore environment around the world," Valaris CEO Anton Dibowitz said in a statement.
Valaris' stock jumped by 22 percent Monday on news of the buyout. Both companies' share prices fell about eight percent in midday trading Tuesday.