The deal will have Transocean acquiring Ocean Rig for a total of $2.70 billion. This will be a mixed offer of cash and stock. It includes $12.75 in cash and 1.6128 newly issued shares of RIG stock for each share of ORIG stock.
The offer from Transocean stock values ORIG stock at $32.28. This is based on the value of RIG stock when the markets closed on Aug. 31, 2018. It is also roughly a 19% premium over the closing price of ORIG stock on Aug. 31, 2018.
Transocean says that it is intending to fund the deal to acquire Ocean Rig with a mixture of cash on hand and additional financing. It notes that Citi will be providing it with the additional financing that it needs to complete the deal.
If the deal between Transocean and Ocean Rig succeeds, then it will leave RIG shareholders with 79% of the company. The remaining 21% of the new company will belong to previous shareholders of ORIG stock.
Transocean also notes that there won’t be any changes to its Board of Directors, executive management team, or corporate structure once the deal is complete. It also says it will continue to keep its headquarters in Steinhausen, Switzerland.
Transocean says that it is expecting the deal to close during the first quarter of 2019. It also has unanimous support from both companies’ Boards of Directors. Now it just needs to complete customary closing conditions, including regulators approval and support from shareholders.
ORIG stock was up 11% and RIG stock was down 6% as of Tuesday morning.
As of this writing, William White did not hold a position in any of the aforementioned securities.