Posted on September 6, 2022
The merger of Maersk Drilling and Noble Corporation is set to proceed after UK regulators today announced that they had accepted the revised proposal for the combination. The companies agreed to the divestment of five rigs and as a result, the UK regulatory authority has decided to end its review clearing the way for the merger to proceed. The companies expect the stock exchange offer to expire on September 8 and the merger to be completed shortly thereafter.
The companies announced their plans in November 2021 to combine their operations in a merger of equals to create what management called “a differentiated provider of offshore drilling services.” The move was in response to the long-term downturn in the offshore services industry. The combination they asserted provides increased scale and global reach supported by industry-leading innovation to enhance customer service.
The UK Competition and Markets Authority, however, in April 2022 confirmed its concerns regarding the proposed merger saying that they believed it could result in reduced competition and increased operating costs for oil and gas producers in the North Sea. The UK investigation primarily focused on the two businesses’ overlapping activities in the supply of jack-up rigs commonly used for offshore drilling by UK customers in the North Sea with the regulators expressing concern that it would reduce competition resulting in higher costs or lower quality service.
The companies had previously said they anticipated that they would have to sell assets to win UK regulatory approval. Under the terms of an agreement reached in June 2022, Shelf Drilling, a Dubai-headquartered operator of drill rigs, agreed to purchase five jack-up rigs for $375 million from Noble. Included in the sale are the rigs Noble Hans Deul, Noble Sam Hartley, Noble Sam Turner, Noble Houston Colbert, and Noble Lloyd Noble and all related support and infrastructure as well as associated drilling contracts. Noble will charter the Noble Lloyd Noble to complete its current drilling program due to end in the second quarter of 2023.
In a 20-page decision released today, September 1, the regulators write, “The CMA considers that the undertakings given by Noble and Maersk Drilling are appropriate to remedy, mitigate or prevent the substantial lessening of competition, or any adverse effect which has or may have resulted from the transaction…” They informed the companies of their decision saying, “The CMA has accepted the undertakings in lieu of reference for the anticipated merger between Noble Corporation and Maersk Drilling,” announcing they would not trigger a more in-depth review.
“Following today’s announcement, all merger control conditions to the Exchange Offer have now been satisfied,” Noble and Maersk Drilling said in a joint statement. The companies launched their voluntary share exchange offer on August 8 and expect it will be completed on September 8, conditional on obtaining acceptances representing at least 80 percent of the outstanding share capital and voting rights of Maersk Drilling.
The companies report they have received an indication that they are accepting the offer from the largest shareholder and family funds representing approximately 54 percent of the shares. After the expiration of the offering, the company plans to move to delist Maersk Drilling from NASDAQ Copenhagen. Robert Eifler, the current president and CEO of Noble will be the CEO of the combined company headquartered in Houston, Texas.