Transocean Ltd. (NYSE: RIG), one of the world's biggest drilling rig operators, has agreed to a deal to buy Norwegian competitor Songa Offshore SE for 9.1 billion Norwegian crowns (US$1.1 billion), the two companies said Aug. 15.

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 ASA's (NYSE: STO) largest drilling service provider.

The offer values Songa shares at 47.50 Norwegian crowns each, a 39.7% premium over the closing price on Aug. 14.

Shares in Songa surged 31% on news of the deal, which needs the backing of at least 90% of Songa shareholders. So far about 77% 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%, the firms said.

"Songa Offshore is an excellent strategic fit for Transocean," Transocean CEO Jeremy Thigpen said, adding 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 mid-water semisubmersible 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, Mohn said in the statement announcing the deal.

By 3:08 a.m. CST (8:08 GMT), Songa shares were up 30% at 44.2 crowns, their highest since March 2016. (US$1 = 7.9596 Norwegian crowns)