Rig giant acquires another at nearly $1 billion implied equity value
Drilling contractor Seadrill has agreed to acquire fellow rig owner Aquadrill in an all-stock deal that values Aquadrill at an implied equity value of approximately $958 million.
Confirming the merger on Friday, Seadrill said that the combination will create “an industry-leading offshore drilling company, with a modern and high specification fleet and a streamlined cost structure”.
The enlarged Seadrill will own 12 floaters – including seven seventh-generation drillships – as well as three harsh environment rigs, four benign jack-ups and three tender-assisted rigs. In addition, seven rigs will be managed under a variety of strategic partnerships. The merged company will have a combined order backlog of $2.8 billion.
Seadrill reckons it will be well-placed to achieve annual run rate synergies of at least $70 million within two years of the merger.
Synergies are expected to be generated through a combination of management fee optimisation; general and administrative and overhead cost savings; logistics, supply chain and inventory efficiencies; and capital expenditure savings.
As of 30 November, Seadrill and Aquadrill had a combined cash balance of approximately $628 million, including approximately $133 million of restricted cash, and a combined debt balance of approximately $521 million.
Seadrill chief executive Simon Johnson said: “At Seadrill we seek to deliver safe and effective operations as the bedrock for generating returns for our shareholders. Seadrill and Aquadrill have a long and rich strategic and operational management history. Our shared heritage will promote efficient integration of the two companies. I look forward to welcoming the Aquadrill fleet back into the Seadrill family.”
On completion of the transaction, Seadrill and Aquadrill unitholders will own 62% and 38% respectively of the outstanding common shares of the company. Aquadrill will become a wholly owned subsidiary of Seadrill.
“We believe this combination will create the most value for our shareholders and will create an excellent platform for high quality service delivery to our customers,” commented Steven Newman, Aquadrill’s chief executive.
Seadrill will continue to be domiciled in Hamilton, Bermuda. Johnson and Julie Robertson will continue in their respective roles as chief executive and chair of the board of directors.
The transaction has been approved by the boards of both Seadrill and Aquadrill and the required approval of Aquadrill’s unitholders has also been obtained. The merger does not require Seadrill shareholder approval.
However, the transaction is subject to applicable regulatory approvals and other customary conditions and is expected to close in mid-2023.
Citi is serving as sole financial advisor and Baker Botts and Advokatfirmaet Thommessen are serving as legal counsel to Seadrill. Intrepid Partners is serving as sole financial advisor and Akin Gump Strauss Hauer & Feld and Advokatfirmaet Schjodt are serving as legal counsel to Aquadrill.
Published: 23-12-2022
