Transocean and Valaris today announced the signing of a  definitive agreement to combine the two companies under which Transocean will acquire Valaris in an all stock transaction valued at approximately $5.8 billion (all currency in USD). The shareholding  percentages of the combined company, on a fully diluted basis(1), will be approximately 53% for  Transocean and 47% for Valaris. The enterprise value of the pro forma company is approximately $17 billion. 

Highlights

• Creates an industry leader with a diversified offshore fleet of 73 rigs, including 33 ultra-deepwater  drillships, nine semisubmersibles and 31 modern jackups, to meet emerging growth opportunities
• Expands reach and customer access in world’s most attractive offshore basins
• Unlocks more than $200 million in identified cost synergies, additive to Transocean's ongoing  cost savings initiative
• Increases cash flow, accelerates deleveraging and strengthens financial flexibility
• Estimated pro forma market capitalization of $12.3 billion 
• Improves trading liquidity and capital markets profile, including an expanded investor base and  opportunities for additional equity index inclusion 

“This transaction creates a very attractive investment in the offshore drilling industry, differentiated by the  best fleet, proven people, leading technologies, and unequalled customer service,” said Keelan Adamson,  Transocean President and Chief Executive Officer. “The powerful combination is well-timed to capitalize  on an emerging, multi-year offshore drilling upcycle. Investors and our global customers will benefit from  our expanded fleet of best-in-class, high-specification rigs. We have identified more than $200 million in  cost synergies that will complement our ongoing efforts to safely lower costs. The strong pro forma cash  flow enables us to accelerate debt reduction, resulting in an expected leverage ratio of about 1.5x within  24 months of the transaction closing.” 

Valaris Chief Executive Officer Anton Dibowitz said, “By combining with Transocean, we will create a new industry leader for the benefit of our shareholders, customers and employees. We look forward to  complementing Transocean’s high-specification deepwater assets with our own, while returning world-class jackup expertise to Transocean's business, creating a combined company that is capable of  operating any rig at any water depth in any offshore environment around the world.” 

A powerful combination 

The transaction brings together highly complementary, premium offshore assets. On a pro forma basis,  the company will own 73 rigs able to serve customers in deepwater, harsh environment, and shallow  water basins around the world. 

An industry-leading combined backlog of approximately $10 billion enhances Transocean’s cash flow  visibility. In addition to Transocean’s ongoing cost-reduction program, which is expected to reduce costs by more than $250 million in aggregate through 2026, identified incremental transaction-related synergies  of more than $200 million will strengthen Transocean’s financial flexibility. 

Transocean’s senior management team will be led by CEO Keelan Adamson, and Jeremy Thigpen will  serve as Executive Chairman of the Board. The board will be comprised of nine current Transocean  directors and two current Valaris directors. Transocean will remain incorporated in Switzerland, with its  primary administrative office in Houston. 

(1) Assumes conversion to shares of Transocean’s exchangeable bonds due 2029

KeyFacts Energy Industry Directory: Transocean   l   KeyFacts Energy: Acquisitions & Mergers news