Key Points
A merger with Transocean could create the world's finest fleet of rigs.
The combined company would be stronger competitively and financially.
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Shares of Valaris (NYSE: VAL) soared on Monday after it struck a deal to be acquired by rival offshore driller Transocean (NYSE: RIG).
By the close of trading, Valaris' stock price was up more than 34%.
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An enticing offer for investors
Under the terms of the deal, Valaris shareholders would receive 15.235 shares of Transocean stock for each Valaris share they own. The all-stock merger values Valaris at roughly $5.8 billion, a premium of over 35% to the energy stock's closing price on Friday.
Forming the best fleet
The combined company would possess the world's highest-quality offshore drilling fleet, comprising 73 rigs. That includes 33 ultra-deepwater drillships and 31 modern jackups used in shallow and medium water depths.
"We look forward to complementing Transocean's high-specification deepwater assets with our own, while returning world-class jackup expertise to Transocean's business, creating a combined company that is capable of operating any rig at any water depth in any offshore environment around the world," Valaris CEO Anton Dibowitz said in a press release.
Greater financial fortitude
Better still, with a combined backlog of about $10 billion and estimated cost savings of $200 million, the deal is expected to bolster Transocean's cash flow and debt-reduction plans.
Smart timing
The transaction is projected to close in the second half of 2026, subject to shareholder and regulatory approval.
"The powerful combination is well-timed to capitalize on an emerging, multi-year offshore drilling upcycle," Transocean CEO Keelan Adamson said.
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Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool recommends Transocean. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
