Noble to Buy Rival Driller Diamond Offshore

Noble Corp., the world’s biggest offshore oil rig contractor by market value, agreed to buy its smaller rival Diamond Offshore Drilling Inc. in a deal valued at $1.6 billion.

Diamond stockholders will receive 0.2316 share of Noble plus $5.65 for each share they own, an 11.4% premium based on the June 7 closing price, according to a statement June 10. When the deal closes, Diamond shareholders will own about 14.5% of Noble’s outstanding shares.

The deal comes as offshore drilling is poised to boom in the years ahead as growth in U.S. shale basins ebbs. Noble shares edged higher before the start of regular trading in New York. Diamond, based in Houston, rose 8.3%.

Noble, based in Sugar Land, Texas, will fund the cash portion of the deal through a $600 million bridge loan. The company plans to expand its board to include one member from Diamond.

Noble also said its board approved a 25% increase in its quarterly dividend to 50 cents per share, starting in the third quarter.

Morgan Stanley & Co. was Noble’s lead financial adviser, and Paul, Weiss, Rifkind, Wharton & Garrison was its legal adviser. Guggenheim Securities LLC and TPH&Co. were financial advisers to Diamond, while Kirkland & Ellis LLP was its legal adviser.

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