Noble Corp. has agreed to acquire Diamond Offshore Drilling in a cash-and-stock transaction that values Diamond at about $1.59 billion, the companies said on June 10.

Under the terms of the agreement, Diamond shareholders will receive 0.2316 shares of Noble, plus cash consideration of $5.65 per share for each share of Diamond stock, representing an 11.4% premium to closing stock prices on June 7. The cash payments to Diamond stockholders represents $600 million cash on a fully diluted basis.

At closing, Diamond shareholders will own approximately 14.5% of Noble's outstanding shares.

Noble expects to realize annual pre-tax cost synergies of $100 million, with 75% expected to be realized within one year of closing.

“We believe Noble’s acquisition is highly strategic, and the addition of 12 offshore floaters is expected to strengthen the company’s revenue and cash flow visibility through the long-duration offshore upcycle,” Evercore ISI analysts said in a June 10 commentary.

On a combined basis, Noble's 14 working (15 total) dual BOP 7th generation drillships will comprise the “leading tier one drillship fleet” in the industry, Noble said. Additionally, the Ocean GreatWhite vessel will provide Noble with a high-spec floater capable of operating in harsh environments, while the remaining five semisubmersibles are expected to contribute meaningful contracted cash flow. The combination creates strong commercial opportunities with complementary customer bases around the world and across rig types, Noble said.

Noble to Acquire Diamond Offshore Drilling for $1.6B in Cash, Stock
(Source: Noble Corp. transaction presentation)

Noble’s board additionally said on June 10 that it would increase its quarterly dividends by 25% to $0.50 per share, beginning in the third quarter.

Noble President and CEO Robert Eifler said the acquisition enables Noble to deliver superior innovation and value to a broad range of the leading offshore operators across the world.

“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,” Eifler said. “Additionally, Diamond's five conventional deepwater and midwater rigs have averaged above 85% utilization over the last 3 years and currently have strong forward contract coverage. 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."

Bernie Wolford, Diamond's president and CEO said the 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,” he said.

Noble intends to fund the cash portion of the transaction through new debt financing. Noble has secured through a $600 million committed bridge financing facility. At closing, the Noble board of directors will expand to include one member from the Diamond Board.

The transaction is subject to the satisfaction of customary closing conditions, including receipt of required regulatory approvals and the approval of Diamond shareholders. The transaction is expected to close by first-quarter 2025.

The transaction has been unanimously approved the boards of both companies.