September 4, 2018 / 11:03 AM / 2 months ago

UPDATE 1-Transocean to buy Ocean Rig in $2.7 bln deal

(Adds details on deal, CEO quote)

Sept 4 (Reuters) - Drilling rig contractor Transocean Ltd said on Tuesday it would acquire peer Ocean Rig UDW Inc 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,” said Transocean Chief Executive Officer Jeremy Thigpen.

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 percent to the stock’s Friday’s close.

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

Citi was Transocean’s financial adviser, while Credit Suisse Securities (USA) LLC advised Ocean Rig. (Reporting by Karan Nagarkatti in Bengaluru)

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