Transocean in $1.1-Billion Deal to Buy Norwegian Rig Firm, Songa Offshore

Transocean, one of the world’s biggest drilling rig operators, has agreed a deal to buy Norwegian competitor Songa Offshore for 9.1 billion Norwegian crowns ($1.1 billion).

The deal, which would be mostly paid for in shares and convertible bonds, would strengthen Transocean’s position in offshore drilling as Songa is Norwegian oil major Statoil’s largest drilling service provider. The offer values Songa shares at 47.50 Norwegian crowns each, a 39.7 per cent premium over Monday’s closing price. Shares in Songa surged 31 per cent on news of the deal, which needs the backing of at least 90 per cent of Songa shareholders. So far, about 77 percent of shareholders have agreed to the offer, the company said.

Songa’s biggest shareholder Perestroika would become the largest shareholder in Transocean as a result of the acquisition, with a stake of about 12 per cent, the firms said.

The deal would increase Transocean’s order book by $4.1-billion to a total of $14.3-billion.

Including debt, the transaction sets Songa’s enterprise value at 26.4 billion crowns.

Transocean said it hopes to complete its purchase of Songa, which has a fleet of seven midwater semi-submersible rigs, in the fourth quarter. Norwegian investor Frederik Wilhelm Mohn, owner of Perestroika and chairman of Songa, will be nominated for a seat on Transocean’s board. While demand for drilling has been hit by the fall in oil prices in recent years, the market for rigs able to operate in harsh-environment conditions is showing signs of recovery.

Keywords: Drilling Rig, Offshore Drilling, Midwater Semi-Submersible Rigs, ARC Advisory Group.