In the last trading session, the stock price of Transocean LTD (NYSE:RIG) gained more than 2% to close the day at $8.23. The gains came at a share volume of 213 compared to average share volume of around 18 million. After the recent gains, the market cap of firm was recorded at $3.22 billion.
Earlier in the month, Transocean agreed to acquire Songa Offshore for $1.1 billion, the latest in a series of deals reshaping the industry. The deal, to be mostly paid for in convertible bonds and shares, follows Ensco Plc’s acquisition of Atwood Oceanics Inc in a deal valued at around $839 million in May. It boosts Transocean’s position in drilling in tough climates like the Arctic, as Songa comes in the list of Norwegian oil major Statoil’s key drilling service provider.
It is an indication that the market is close to the bottom, and people don’t anticipate asset prices to decline much further. For Transocean, it marks as a strategic deal. The acquisition boosts Transocean’s operations in harsh-environment drilling and expands its order book to $14.3 billion, a jump of $4.1 billion.
Including debt, the deal sets Songa’s enterprise value at around $3.4 billion. The deal needs the support of at least 90% of Songa shareholders. Around 77% of shareholders have so far accepted the offer.
Songa’s biggest shareholder, Perestroika, would become the major shareholder in Transocean as an outcome of the acquisition with an ownership of about 12%. Mohn, who is the chairman of Songa, will be voted for a seat on Transocean’s board.
The latest acquisition comes at a time of turmoil in the industry, with Seadrill undergoing a debt restructuring and liabilities amounting to around $14 billion. Schlumberger, the world’s leading oilfield services provider, has bought a 20% stake in Borr, which intends to list on the Oslo exchange by the close of the third quarter.