Noble Corp., the world’s largest offshore rig contractor when measured by market capitalization, has agreed to buy one of its competitors in a deal valued at approximately $1.6 billion.
In yet another major stock-and-cash deal this year in the energy sector, Sugar Land-based Noble plans to purchase Houston-based Diamond Offshore Drilling by paying a premium of 11.4 percent per share. When the deal closes, Diamond shareholders will own 14.5 percent of Noble’s outstanding shares.
“This acquisition enables Noble to continue our journey of delivering superior innovation and value to a broad range of the leading offshore operators across the world,” said Noble CEO Robert Eifler in the release. “Our position will be strengthened with the addition of four 7th generation drillships and one of the most high-spec harsh environment semisubmersible rigs in the world. Additionally, Diamond’s five conventional deepwater and midwater rigs have averaged above 85 percent utilization over the last 3 years and currently have strong forward contract coverage. Supported by Diamond’s $2.1 billion of backlog and $100 million of anticipated cost synergies, we expect the transaction to be immediately accretive to our free cash flow per share and contribute to accelerated growth in our return of capital to shareholders.”
Kirkland & Ellis represented Diamond Offshore, while Paul Weiss represented Noble in the deal, which is expected to close no later than the first quarter of next year, pending regulatory approval.
Kirkland’s deal team was led by Houston corporate partners Sean Wheeler, Debbie Yee and Camille Walker; debt finance partner Rachael Lichman; capital markets partners Julian Seiguer and Atma Kabad; tax partners David Wheat (Dallas) and Bill Dong (Salt Lake City); antitrust & competition partners Ian John(New York), Chuck Boyars (Washington), Thomas Sebastian Wilson (Brussels) and Sion Davies(London); and executive compensation partners Rob Fowler and Stephanie Jeane.
Unless otherwise noted, the Paul Weiss deal team was led out of New York by Kyle Seifried, Scott Barshay, Gili Farhadian-Sagiv and Richard Schwartz, and includes corporate partners Benjamin Goodchild, Suhan Shim, Tim Cruickshank and Patricia Vaz de Almeida and counsel Nathan Mitchell (Washington); executive compensation partners Ron Aizen and Andrea Wahlquist Brown; tax partner Brian Krause and counsel Patrick Karsnitz; and real estate partner Salvatore Gogliormella.
Jennie Howard, previously an assistant general counsel at Kraton and a former Andrews Kurth lawyer, is senior vice president and general counsel for Noble. David Roland, whose experience includes previous roles at ION Geophysical and Enron, is Diamond Offshore’s senior vice president and general counsel.
Morgan Stanley served as lead financial advisor for Noble, with Wells Fargo and SB1 Markets also advising the company. Guggenheim Securities and TPH&Co. served as lead financial advisors for Diamond.
“This combination is an ideal outcome that provides Diamond shareholders both immediate and long-term upside potential as part of a more fully scaled platform that can deliver customer and shareholder value on a through-cycle basis, more visibly and accessibly, while gaining access to Noble’s robust dividend program,” said Diamond CEO Bernie Wolford in the release. “Noble’s operational strength, service posture and proven integration capabilities make this a natural match for Diamond.”
Noble, which intends to fund the cash portion of the deal via new debt financing, anticipates a yearly pre-tax cost savings of $100 million, with 75 percent projected to be gained within one year of the deal’s close, according to the release.