Offshore drilling services firm Transocean Ltd. (RIG) announced Monday an agreement to acquire rival Valaris Ltd. (VAL) in an all-stock transaction valued at approximately $5.8 billion. The enterprise value of the pro forma company is around $17 billion.
Following the news, Valaris shares were gaining around 21 percent, trading at $75.50.
Transocean shares were trading 0.2% lower at $5.37.
Under the deal terms, Valaris shareholders will receive a fixed exchange ratio of 15.235 shares of Transocean stock for each common share of Valaris. Based on the closing prices of both companies on February 6, the transaction implies a combined enterprise value of approximately $17 billion.
The acquisition will be carried out by way of a court-approved scheme of arrangement under the Companies Act 1981, as amended, of Bermuda.
The transaction, which was approved by the boards of directors of both companies, is expected to close in the second half of 2026, subject to regulatory approvals and customary closing conditions.
Following the merger, Transocean shareholders will own around 53% of the combined company, while Valaris shareholders will own the remaining around 47%.
The combined firm will have a diversified offshore fleet of 73 rigs, including 33 ultra-deepwater drillships, nine semisubmersibles and 31 modern jackups, to meet emerging growth opportunities.
Keelan Adamson, Transocean President and Chief Executive Officer, said, "We have identified more than $200 million in cost synergies that will complement our ongoing efforts to safely lower costs. The strong pro forma cash flow enables us to accelerate debt reduction, resulting in an expected leverage ratio of about 1.5x within 24 months of the transaction closing."
The expected cost synergies are in addition to Transocean's ongoing cost-reduction program, which is expected to reduce costs by more than $250 million in aggregate through 2026.
The combined firm will be led by Transocean CEO Keelan Adamson, while Jeremy Thigpen will serve as Executive Chairman of the Board. The board will be comprised of nine current Transocean directors and two current Valaris directors.
Transocean will remain incorporated in Switzerland, with its primary administrative office in Houston.
In the deal, Evercore is acting as lead financial advisor to Transocean.
Goldman Sachs & Co. LLC and Skadden, Arps, Slate, Meagher & Flom LLP, Lenz & Staehlin, and Conyers Dill & Pearman Limited are financial advisors and legal advisors, respectively, to Valaris.
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