Seadrill Ltd (NYSE:SDRL) stock was on the rise Friday following reports of possible merger and acquisition interest.
A recent report claims that China Merchants Group, a state-owned organization, has an interest in the company. The group is reportedly looking to acquire a company in the off-shore oil industry and it has Seadrill Ltd and Shelf Drilling Ltd. on its radar.
According to the report, China Merchants Group hasn’t made an official offer for Seadrill Ltd. Instead, it is simply in the early stage of talks. The unnamed sources of these rumors claims that the group may not chose to pursue a deal.
An offer from China Merchants Group could be good news for SDRL stock. The company has been suffering lately as the off-shore oil industry slumps. Seadrill Ltd has gone so far as to warn investors that it will likely be filing for Chapter 11 bankruptcy protection in the future, reports Bloomberg.
China Merchants Group already has an interest in the off-shore oil market. One of its companies makes oil rigs and equipment for them. Acquiring Seadrill Ltd could provide synergies for the two companies and help the latter overcome its debt.
SDRL stock was hit hard in July when it warned investors of its possible bankruptcy. The company also noted that investors in its stock weren’t likely to see much in the way of recovery, despite it undertaking a restructuring plan.
SDRL stock was up 66% as of Friday morning, but is down 90% year-to-date.
As of this writing, William White did not hold a position in any of the aforementioned securities.