Noble Corp and Maersk Drilling have entered into a definitive business combination agreement to combine in a primarily all-stock transaction. Following the completion of the transaction, the Maersk Drilling shareholders and Noble shareholders will each own approximately 50% of the outstanding shares of the combined company. The combined company will be named Noble Corp.
The combined company will have a modern, high-end fleet comprising of 20 floaters and 19 jackup rigs across benign and harsh environments. It is expected to generate estimated annual run-rate synergies of $125 million, which the companies say will create significant value for shareholders.
The business combination agreement has been unanimously approved by the Boards of Directors of Noble and Maersk Drilling, and the transaction is also supported by Noble’s top three shareholders, which collectively currently own approximately 53% of Noble shares, and APMH Invest A/S which currently owns approximately 42% of the share capital and votes of Maersk Drilling. In addition, certain foundations related to APMH Invest A/S, which currently own approximately 12% of the share capital and votes of Maersk Drilling, have expressed their intention to support the transaction.
“This combination carries strong industry logic. With the combination, we are creating a differentiated provider of offshore drilling services, which will be able to enhance the customer experience through increased scale, global reach and industry-leading innovation,” said Claus V. Hemmingsen, Chairperson of the Board of Directors at Maersk Drilling. “The combination will create value for all shareholders and will offer investors a unique opportunity to benefit from the market recovery, a robust financial position and strong free cash flow potential, all paving the way for the potential return of capital to shareholders.”
The combined company is expected to have a normalized free cash flow potential of up to $375 million in 2023 and onwards with a highly attractive free cash flow yield potential, and additional cash flow growth stemming from the recovery of the international offshore drilling market. The balance sheet of the combined company will be best-in class with low net leverage and strong liquidity including a combined cash balance of approximately $900 million, providing resiliency through the cycle and allowing the combined company to focus on implementing a sustainable return of capital policy for shareholders.
“The combination of Noble and Maersk Drilling will create a leading offshore driller with global scale, a strong balance sheet and significant free cash flow generation potential. The transaction will be accretive to free cash flow per share, and I am confident that this combination will deliver meaningful value to all shareholders,” said Charles M. Sledge, Chairperson of the Board of Directors at Noble Corp.