Maersk Developer rig - Maersk Drilling

Maersk Drilling to merge with Noble

Danish offshore drilling contractor Maersk Drilling has entered into a definitive agreement to combine with its U.S. rival Noble Corporation in a primarily all-stock transaction, which will result in the creation of a combined company with a fleet of 20 floaters and 19 jack-up rigs.

Maersk Developer rig; Source: Maersk Drilling
Maersk Drilling - Noble Corporation
Source: Maersk Drilling

The combined company will be named Noble Corporation and its shares will be listed on the New York Stock Exchange and Nasdaq Copenhagen. The transaction is targeted to close in mid-2022.

According to their joint statement on Wednesday, both companies share a very strong conviction in the compelling industrial logic behind the creation of a world-class offshore driller with the scale, capabilities, and resources to successfully serve a broad range of customers. The combined company will own and operate a modern, high-end fleet of floaters and jack-up rigs across benign and harsh environments, serving customers in the most attractive offshore oil and gas basins.

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Reuters reported that the combined market capitalisation of the two companies is estimated at approximately $3.4 billion.

The business combination agreement has been unanimously approved by the boards of both companies and it is also supported by major shareholders of both companies, including Noble’s top three shareholders, which collectively currently own approximately 53 per cent of Noble shares, and APMH Invest A/S, which currently owns approximately 42 per cent of the share capital and votes of Maersk Drilling.

In addition, certain foundations related to APMH Invest A/S, which currently own approximately 12 per cent of the share capital and votes of Maersk Drilling, have expressed their intention to support the transaction.

Maersk Drilling’s Chairman of the Board, Claus V. Hemmingsen, said: “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.

“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.”

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Maersk Drilling CEO, Jørn Madsen, said that Noble is the right match for Maersk Drilling, and the combination makes a lot of sense. He also added: “In the short term, the combination will, unfortunately, impact our organisation, but it will also create a larger and stronger company, which will provide future opportunities for growth and new jobs.”

The combination is expected to generate potential cost synergies of $125 million per year with full potential to be realized within two years after the closing of the transaction.

In the last twelve months ended September 2021, Noble and Maersk Drilling had combined pro-forma revenue of approximately $2.1 billion. Also at the end of September, the companies had a combined cash balance of approximately $900 million resulting in net debt of approximately $600 million with no newbuild capex commitments. The companies had a revenue backlog of $2.4 billion (pro-forma for the asset divestitures).

New company leadership

The combined company will have a seven-member board of directors with balanced representation from each of Noble and Maersk Drilling. Initially, the board will be comprised of three directors appointed by Noble and three directors appointed by Maersk Drilling, one of whom will be the current Chairman of the Board of Maersk Drilling, Claus V. Hemmingsen. Noble and Maersk Drilling will jointly appoint Charles M. (Chuck) Sledge the Chairman of the Board of Directors of the combined company.

It has been agreed that Robert W. Eifler, Noble’s President and CEO will become President and CEO of the combined company upon closing of the transaction. He will also be a member of the board.

The combined company will be headquartered in Houston, Texas, and will maintain a significant operating presence in Stavanger, Norway, to retain proximity to customers and support operations in the Norwegian sector and the broader North Sea, and to ensure continued access to talent.

The merger

The combination is a primarily all-stock transaction where the shares of the combined company will be distributed equally between the current shareholders of Noble and Maersk Drilling. The transaction will be implemented through an English incorporated holding company, which will make a voluntary tender exchange offer to the shareholders of Maersk Drilling.

The tender exchange offer will allow Maersk Drilling’s shareholders to exchange each Maersk Drilling share for 1.6137 shares in the new holding company. Upon the closing of the transaction, the shareholders of Maersk Drilling and Noble will each own approximately 50 per cent of the outstanding shares of the new holding company.

The transaction is subject to Noble shareholder approval, acceptance of the exchange offer by holders of at least 80 per cent of Maersk Drilling’s shares, merger clearance and other regulatory approvals, listings on New York Stock Exchange and Nasdaq Copenhagen, and other customary conditions.