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Maritime Accident News

Offshore Drillers Transocean and GlobalSantaFe Agree to Merge

Posted on Jul 23, 2007

Transocean, GlobalSantaFe to Merge By KEVIN KINGSBURY July 23, 2007 7:47 a.m. (From the Wall Street Journal) Transocean Inc. and GlobalSantaFe Corp. have agreed to a merger in the oil-drilling sector among firms with a combined market capitalization of $48 billion. The deal, set to close by year-end, also includes shareholders of both companies getting $15 billion through a recapitalization that will reduce the size of shareholders' current stakes in the firms. The cash will come from a bridge loan from Goldman Sachs Group Inc. and Lehman Brothers Inc. Under the deal's terms, Transocean shareholders will receive $33.03 in cash and 0.6996 share of the combined company for each share of Transocean they own. GlobalSantaFe shareholders will receive $22.46 and 0.4757 share of the combined company. There is no premium to GlobalSantaFe holders. Transocean's market cap is $31.7 billion, while GlobalSantaFe is nearly half that at $17 billion. There will be about 318 million shares outstanding after the deal closes. Transocean Chief Executive Robert L. Long, who will remain in that post after the merger, said the deal will result in the combined company owning 146 rigs. The two companies have a combined backlog of $33 billion. GlobalSantaFe President and CEO Jon A. Marshall will serve as Transocean's president and operating chief. He said: "The $15 billion cash payment allows us to achieve a more appropriate capital structure and deliver immediate value to our combined shareholders. The combined company will have a broader customer base, particularly with the increasingly important national oil companies" and greater exposure to the growing deepwater business. There was no premarket trading of either company's stock. Transocean will hold a conference call at 10 a.m. EDT.