Transocean has entered into a definitive agreement to purchase Valaris through an all-stock transaction valued at around $5.8bn (SFr4.44bn).
The agreement will create a combined offshore drilling company with a diversified fleet of 73 rigs including 33 ultra-deep-water drill-ships, nine semisubmersibles and 31 jack-ups.
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Upon completion of the deal, Transocean shareholders will hold around 53% of the combined group, while Valaris shareholders will account for roughly 47%.
Pro forma enterprise value is projected at $17bn and market capitalisation at approximately $12.3bn. Operations for the merged entity will span deep-water, harsh environment and shallow-water markets worldwide.
The newly formed board will comprise nine existing Transocean directors and two current Valaris directors.
The combined company will continue to be registered in Switzerland and will keep its primary administrative headquarters in Houston.
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By GlobalDataTransocean president and CEO Keelan Adamson said: “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.
“The powerful combination is well-timed to capitalise 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 $200m 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.”
The combined backlog stands at around $10bn, enhancing cash flow visibility for Transocean.
Transaction-related synergies are expected to exceed $200m, supplementing Transocean’s ongoing cost-reduction programme that targets more than $250m in aggregate savings through 2026.
Valaris shareholders are set to receive a fixed exchange ratio of 15.235 shares of Transocean stock for each Valaris share.
Valaris CEO 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 deep-water assets with our own, while returning world-class jack-up 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.”
Both boards have approved the agreement unanimously. Completion of the deal will require regulatory clearance, shareholder approval from each company and satisfaction of standard closing conditions.
The closing of the deal is targeted for the second half of 2026 (H2 2026).
Perestroika, which owns approximately 9% of Transocean shares, along with Famatown Finance and Oak Hill Advisors, which together hold roughly 18% of Valaris shares, have each agreed to vote in support of the deal.
The transaction will proceed by means of a scheme of arrangement approved by the court in accordance with Bermuda legislation.
Evercore serves as the principal financial adviser to Transocean, with Hogan Lovells, Homburger and Appleby (Bermuda) providing legal counsel.
DrivePath Advisors is managing financial communications for Transocean.
Valaris is receiving financial advice from Goldman Sachs, with Skadden, Arps, Slate, Meagher & Flom, Lenz & Staehlin, and Conyers Dill & Pearman acting as its legal advisers.
Joele Frank, Wilkinson Brimmer Katcher is responsible for strategic communications support for Valaris.
Last month, Transocean secured a new contract and extension for its Deepwater Mykonos and Transocean Enabler drilling rigs, respectively, amassing a firm backlog of approximately SFr132.89m.
