Drilling rig contractor Transocean Ltd. (NYSE: RIG) said on Sept. 4 it would acquire peer Ocean Rig UDW Inc. (NASDAQ: ORIG) in a cash-and-stock deal valued at about $2.7 billion, including debt.

The deal will help Switzerland-based Transocean enhance its fleet of ultra-deepwater and harsh environment floating rigs.

“The combination of constructive and stable oil prices over the last several quarters, streamlined offshore project costs, and undeniable reserve replacement challenges has driven a material increase in offshore contracting activity,” Transocean CEO Officer Jeremy Thigpen said.

Transocean will pay 1.6128 newly issued shares and $12.75 in cash for each share of Ocean Rig’s common stock for a total implied value of $32.28 per Ocean Rig share, which represents a premium of 19.2% to the stock’s close Aug. 31.

Upon completion, Transocean shareholders will own about 79% of the combined company, while Ocean Rig shareholders will hold the remaining 21%.

Citi was Transocean’s financial adviser, while Credit Suisse Securities (USA) LLC advised Ocean Rig.