Diller Noble acquires Diamond Offshore for $1.6bn

Texas-based oil company Noble Corporation has announced plans to snap up Diamond Offshore Drillling for $1.6bn.

Under the terms of the cash-and-stock transaction, Diamond shareholders will get 0.2316 Noble shares and $5.65 per share in cash for each Diamond share they own. Following the deal, Diamond shareholders will own around 14.5% of Noble's shares.

The implied purchase price is therefore $15.52 a share, an 11.4% premium to Diamond's share price on Friday.

According to Noble's president and chief executive Robert Eifler, the acquisition will strengthen the company with the addition of four seventh-generation drillships and "one of the most high-spec harsh environment semisubmersible rigs in the world".

"Additionally, Diamond's five conventional deepwater and midwater rigs have averaged above 85% utilisation over the last three years and currently have strong forward contract coverage," Eifler said.

"Supported by Diamond's $2.1bn of backlog and $100m 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 futures were up nearly 5% at $14.57 in pre-market trade, while Noble gained 0.4% to $42.75.