Oilfield services firm Transocean said on Monday it would acquire peer Valaris in an all-stock deal valued at $5.8 billion, expanding its exposure across deepwater, harsh-environment and shallow-water basins worldwide.
Transocean’s shares were marginally down, while Valaris’ shares were up 24.3 per cent at $77.64 in morning trade.
Oilfield service providers have followed energy producers and pursued deals to navigate operational and pricing pressures, as customers rein in spending on new wells and prioritise returns to investors.
Transocean, which had $4.85 billion in long-term debt as of September 30, said the deal will support debt reduction through cost savings, stronger cash flows and improved scale following the merger.
“We know that our debt level negatively impacts our equity value. This transaction addresses that,” said Transocean CEO Keelan Adamson during a conference call. He added that he expects the company’s leverage ratio to drop to about 1.5 times within 24 months of closing.
