Noble Corporation plc (CSE: NOBLE) (NYSE: NE) and Diamond Offshore Drilling, Inc. (NYSE: DO) have announced a definitive merger agreement under which Noble will acquire Diamond in a strategic stock plus cash transaction. This deal will see Diamond shareholders receive 0.2316 shares of Noble and $5.65 in cash per share, totaling a transaction value of approximately $15.52 per share. This represents an 11.4% premium over Diamond’s closing stock price on June 7, 2024, with Diamond shareholders set to own about 14.5% of Noble’s outstanding shares post-transaction.

Transaction Details and Strategic Benefits

Noble’s acquisition of Diamond not only expands its drilling capabilities but also significantly strengthens its position in the offshore drilling sector with the addition of four 7th generation drillships and a high-spec harsh environment semisubmersible rig. The merger is supported by Diamond’s impressive $2.1 billion backlog and is expected to be immediately accretive to Noble’s free cash flow per share, enhancing shareholder returns.

Robert Eifler, President and CEO of Noble, highlighted the strategic merits of the acquisition, stating, “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.”

Bernie Wolford, President and CEO of Diamond, also commented on the merger, emphasizing the long-term benefits for Diamond shareholders and the synergy between the two companies’ operational strengths and cultural values.

Financial Structure and Future Outlook

The merger is structured with Noble issuing new debt to fund the cash portion of the transaction, backed by a $600 million committed bridge financing facility. The combined company will boast a fleet of 41 rigs and a robust backlog of approximately $6.5 billion, ensuring significant contracted cash flow and customer diversity across various regions.

Neal P. Goldman, Chairman of Diamond, praised the transaction for its strategic alignment and potential for value creation, reflecting on the accomplishments of Diamond’s team in building a substantial foundation for this merger.

Dividend and Shareholder Value

In conjunction with the merger announcement, Noble’s Board of Directors has approved a 25% increase in its quarterly dividend to $0.50 per share, starting in the third quarter of 2024. This adjustment signifies Noble’s commitment to returning value to shareholders, with further dividends anticipated on a quarterly basis.

Regulatory and Closing Conditions

The transaction, expected to close by the first quarter of 2025, is subject to customary closing conditions, including regulatory approvals and the approval of Diamond shareholders. Both companies’ Boards of Directors have unanimously approved the transaction.

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