Noble Corporation To Acquire Diamond Offshore Drilling In $15.52/Share Deal; Enhances Dividend Payouts By 25%

Zinger Key Points
  • Diamond Offshore Drilling (NYSE: DO) signs merger agreement with Noble Corp (NYSE: NE), offering $15.52 per share, an 11.4% premium.
  • Noble plans a 25% dividend boost to $0.50 per share in Q3 2024, with expected $100M annual pre-tax cost synergies post-merger.

Diamond Offshore Drilling, Inc. DO shares are trading higher after the company disclosed that it signed a definitive agreement to be acquired by Noble Corporation plc NE in a stock-plus-cash transaction.

The implied cash and stock consideration for Diamond shareholders is $15.52 per share, reflecting an 11.4% premium over Diamond’s closing share price on June 7, 2024.

As per the deal, Diamond shareholders will receive 0.2316 shares of Noble plus $5.65 in cash for each Diamond share.

The transaction expected to close by the first quarter of 2025, subject to customary closing conditions.

Once the deal is completed, Diamond shareholders will hold approximately 14.5% of Noble’s outstanding shares.

Dividend Boost: Additionally, Noble’s Board of Directors has approved a 25% increase in its quarterly dividend to $0.50 per share, starting in the third quarter of 2024. The dividend is payable on September 26 to shareholders of record as on September 12.

Synergies: Noble anticipates annual pre-tax cost synergies of $100 million, with 75% expected to be achieved within the first year after closing.

The transaction is expected to significantly and immediately boost Noble’s free cash flow per share, enhancing the company’s ability to increase capital returns to shareholders.

Noble’s President and Chief Executive Officer, Robert Eifler, stated, “Our position will be strengthened with the addition of four 7th generation drillships and one of the most high-spec harsh environment semisubmersible rigs in the world.”

“Supported by Diamond’s $2.1 billion of backlog and $100 million of anticipated cost synergies, we expect the transaction to be immediately accretive to our free cash flow per share and contribute to accelerated growth in our return of capital to shareholders.”

Diamond’s President and Chief Executive Officer, Bernie Wolford, commented, “This combination is an ideal outcome that provides Diamond shareholders both immediate and long-term upside potential as part of a more fully scaled platform that can deliver customer and shareholder value on a through-cycle basis, more visibly and accessibly, while gaining access to Noble’s robust dividend program. Noble’s operational strength, service posture and proven integration capabilities make this a natural match for Diamond.”

Noble plans to fund the cash portion of the deal with $600 million worth new committed bridge financing facility. As of March-end, cash and cash equivalents stood at $212.5 million.

At closing, the Noble Board of Directors will be expanded to include one member from the Diamond Board.

Price Action: DO shares are up 4.59% at $14.57 premarket at the last check Monday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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