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(Reuters) – Oilfield services firm Noble said on Monday it would buy smaller rival Diamond Offshore Drilling in a cash-and-stock deal that would value the transaction at $1.59 billion, the latest in a series of buyouts in a sector undergoing massive consolidation.
Shares of Diamond Offshore rose 4.6% before markets opened on Monday.
Oil and gas majors who rely on service providers for drilling and formation evaluation, well construction and completion services, are investing record profits to acquire international and offshore drilling inventories amid strong oil prices, boosting prospects for companies like Noble.
Industry insiders have also said improving balance sheets and margins could help kick-start dealmaking at a smaller scale in the oilfield services sector.
Top oilfield services firm SLB made a nearly $8 billion bid for ChampionX earlier this year to add new technology offerings.
Noble said it would pay $15.52 per Diamond Offshore share, representing a premium of 11.4% to Diamond’s closing share price on Friday.
Based on 102.48 million of Diamond’s outstanding shares, a Reuters calculation puts the deal value at $1.59 billion.
Noble said it would fund the cash part of the deal – expected to add to its free cash flow per share immediately -through a new secured financing of $600 million.
It is also expected to result in pre-tax cost synergies of $100 million, 75% of which should come within a year of the deal closing in the first quarter of 2025, Noble added on Monday.
The deal will lead to a combined backlog of $6.5 billion, with Noble owning and operating a fleet of 41 rigs including 28 floaters and 13 jackups.
The deal to buy Diamond Offshore follows Noble’s $3.4 billion merger with Maersk Drilling, which completed in 2022.
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