Allis-Chalmers Energy Inc. (ALY) said it has agreed to be bought by Norway-based Seawell Limited, a subsidiary of SeaDrill Ltd (SDRL), in a transaction valued at about $890 million including assumed debt. The Boards of Directors of both companies have unanimously approved a definitive merger agreement providing for the acquisition.
As per the agreement, Allis-Chalmers stockholders can elect $4.25 in cash or 1.15 Seawell common shares for each of their shares, subject to proration. Based on the closing price of the Seawell common shares on the NOTC on August 12, the implied acquisition price represents a 77% premium over the closing price of $2.30 on August 12.
The merger is conditioned, among other things, on the listing of Seawell on the Oslo Bors or the London Stock Exchange and Seawell raising at least an additional $100 million in equity.
The acquisition will combine Seawell's Drilling and Well Services business with Allis-Chalmers' Drilling, Rental and Oilfield Service offerings, thus creating a global oilfield service company with operations in over 30 countries, including the US, Gulf of Mexico, Brazil, Argentina, North Sea, Middle East, Africa and Southeast Asia / Pacific.
The combined company will have around 6,500 employees and is projected to have estimated revenues of $1.3 billion.
Upon completion of the merger, Jørgen Peter Rasmussen, Seawell's Executive Chairman, will be the combined company's new Chief Executive Officer and President, and a member of the Board of Directors. Thorleif Egeli, currently Chief Executive Officer of Seawell Management AS, will be the new company's Chief Operating Officer and Executive Vice President.
The non-executive Chairman of Seawell Limited will be Saad Bargach of Lime Rock Partners and Tor Olav Trøim will continue as Vice-Chairman. Allis-Chalmers' Chairman and Chief Executive Officer Munawar Hidayatallah will serve as a senior advisor to the new Board.
Further, Lime Rock Partners V, L.P. has entered into an agreement with Seawell and has agreed that if it votes in favor of the merger, it will elect to receive Seawell common shares in respect of the Allis-Chalmers preferred and common stock that it holds.
Lime Rock has also agreed to vote its Allis-Chalmers shares against any alternative transaction for a period of nine months following any termination of the merger agreement.
The transaction could close as soon as the end of the calendar year.
Commenting on the deal, Jorgen Peter Rasmussen, said, "This is a major step in our quest to create a global first-class drilling and well services company focused on assisting our customers in producing more hydrocarbons from their existing fields. We complement each other with a much improved geographical footprint, similar focus on customers and a wider range of technology and services."
Alpha Corporate Finance and Goldman Sachs International are acting as Seawell's financial advisors, while it is given legal advise by Skadden, Arps, Slate, Meagher & Flom LLP, and Wiersholm, Mellbye & Bech, advokatfirma AS.
Andrews Kurth LLP and Thommessen are legal advisors for Allis-Chalmers. RBC Capital Markets Corp. is acting as Allis-Chalmers' financial advisor and rendered a fairness opinion to its Board of Directors.
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