Noble Corporation plc (CSE: NOBLE, NYSE: NE) and Diamond Offshore Drilling, Inc. (NYSE: DO) have secured the final regulatory clearance from the Australian Competition & Consumer Commission for their pending transaction, paving the way for the merger to close on September 4th, 2024. This approval marks the last hurdle for Noble’s acquisition of Diamond Offshore in a strategic deal aimed at bolstering its position in the offshore drilling sector.

Details of the strategic merger

Noble Corporation, a leader in the offshore drilling industry, has been providing contract drilling services for the oil and gas sector since 1921. The company is known for operating a versatile fleet of ultra-deepwater and high-specification jackup drilling units across established and emerging markets. Diamond Offshore Drilling, another significant player in offshore drilling, brings its expertise in deepwater challenges and innovative solutions to the merger.

The deal, initially announced in June 2024, involves a definitive merger agreement where Diamond Offshore shareholders will receive 0.2316 shares of Noble and $5.65 in cash per share. This structure values the transaction at approximately $15.52 per share, representing an 11.4% premium over Diamond’s closing stock price on June 7, 2024. Upon completion, Diamond shareholders are expected to own about 14.5% of Noble’s outstanding shares.

Strategic benefits and enhanced capabilities

The acquisition will enhance Noble’s operational capabilities with the addition of Diamond’s assets, including four 7th-generation drillships and a high-specification harsh environment semisubmersible rig. This strategic move is supported by Diamond Offshore’s substantial $2.1 billion backlog, which is projected to be immediately accretive to Noble’s free cash flow per share, thus improving shareholder returns.

Robert Eifler, President and CEO of Noble, highlighted the benefits 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 noted the merger’s long-term benefits, underscoring the synergy between the two companies’ operational strengths and cultural values.

Financial structure and future outlook

The financial framework for the merger involves Noble issuing new debt to cover the cash portion of the transaction. This is backed by a $600 million committed bridge financing facility, ensuring sufficient liquidity for the acquisition. Following the merger, the combined entity will operate a fleet of 41 rigs with a robust backlog of approximately $6.5 billion. This extensive contracted cash flow and diverse customer base across various regions will bolster the company’s financial stability and growth prospects.

Neal P. Goldman, Chairman of Diamond, lauded the merger for its strategic alignment and the value it promises to create, noting the strength of Diamond’s foundation that supports this transformative deal.

The merger between Noble Corporation and Diamond Offshore Drilling represents a significant consolidation in the offshore drilling industry. With the final regulatory clearance secured, both companies are poised to leverage their combined strengths to navigate the complex challenges and opportunities in the global offshore drilling market.

  Bernie Wolford, Diamond Offshore Drilling, Mergers and Acquisitions, Noble Corporation, offshore drilling, oil and gas industry, Robert Eifler