Drilling rig contractor Transocean Ltd. said Sept. 4 that it will acquire Ocean Rig UDW Inc. in a cash and stock transaction valued at approximately $2.7 billion, inclusive of Ocean Rig's net debt.
The transaction consideration is made up of 1.6128 newly issued shares of Transocean, plus $12.75 in cash for each share of Ocean Rig's common stock, for a total implied value of $32.28 per Ocean Rig share based on the closing price on Aug. 31. This represents a 20.4% premium to Ocean Rig's ten-day volume weighted average share price. The transaction has been unanimously approved by the board of directors of each company.
Transocean intends to fund the transaction through a combination of cash on hand and fully committed financing provided by Citi.
Upon completion, Transocean's and Ocean Rig's shareholders will own approximately 79% and 21%, respectively, of the combined company.
No changes to Transocean's board of directors, executive management team, or corporate structure are anticipated as a result of the acquisition. The company will remain headquartered in Steinhausen, Switzerland, with a significant operating presence in Houston; Aberdeen, Scotland; and Stavanger, Norway.
The transaction, which is expected to be completed during the first quarter of 2019, is subject to the approval of both Transocean and Ocean Rig shareholders and the satisfaction of customary closing conditions, including applicable regulatory approvals.