Noble Corporation plc, a major player in the offshore drilling sector, recently announced the acquisition of Diamond Offshore Drilling, Inc. for $1.9 billion. This strategic transaction, combining shares and cash, significantly strengthens Noble’s position in the global offshore drilling market. Diamond Offshore shareholders will receive 0.2316 Noble shares plus cash compensation of $5.65 per share, offering an 11.4% premium on the June 7, 2024 closing price. At closing, Diamond shareholders will own approximately 14.5% of Noble’s outstanding shares.
Significant synergies and operating benefits
The merger combines the complementary fleets of Noble and Diamond Offshore, extending customer coverage and operational capabilities. Noble will benefit from the addition of four seventh-generation drillships and a state-of-the-art semi-submersible platform. In addition, Diamond’s conventional platforms have maintained a utilization rate in excess of 85% over the past three years, with strong contractual coverage. Annual pre-tax cost synergies are expected to reach $100 million, with 75% of savings realized within one year of closing. The acquisition should also immediately increase Noble’s free cash flow per share.
Financial impact and growth prospects
Noble expects this transaction to be immediately accretive to its free cash flow per share, facilitating a rapid increase in the return of capital to shareholders. The combined backlog of the two companies amounts to $6.5 billion, providing greater visibility on future cash flows. By integrating Diamond’s assets and skills, Noble strengthens its ability to offer innovative, high-quality solutions to a global customer base. The merger also enables Noble to diversify its portfolio of customers and operating regions, increasing its resilience to market fluctuations. Noble Corporation’s acquisition of Diamond Offshore marks a crucial step in expanding and strengthening its capabilities in the offshore drilling sector. By combining complementary assets and realizing substantial synergies, Noble is positioning itself as a leader capable of delivering increased value to its customers and shareholders. This strategic transaction demonstrates Noble’s commitment to innovation and excellence in the offshore drilling industry.
