Transocean LTD (NYSE:RIG) reported that it has agreed to buy all of the outstanding common shares of Transocean Partners LLC not already owned by company in a ‘share-for-unit’ merger deal. As per the deal update, Transocean Partners common shareholders will get 1.1427 RIG shares for each RIGP common share. The Transocean Partners share price implicit by the exchange ratio signifies a 15% premium to RIGP closing price as on July 29.
Transocean projects to issue nearly 22.7 million shares under the proposed merger deal. Completion of the deal is conditioned upon consent by Transocean Partners` common shareholders and is projected to complete in 4Q2016. The deal is expected to usually be non-taxable to RIGP common unit holders.
Following closure of the deal, Transocean Partners will be fully owned by Transocean and hence it will have indirectly bought the 51% ownership stake in the Discoverer Inspiration, the Development Driller III and the Discoverer Clear Leader that as of now are owned by Transocean Partners. Moreover, RIGP common units will stop to be publicly traded on the reputed NYSE platform.
The management speaks
Jeremy Thigpen, the CEO of President of Transocean, said that they are thrilled about this deal, as it offers immediate and considerable advantages to company in the form of better governance and administration, improved liquidity and tangible cost savings. The planned all-equity deal perfectly goes well with the company’s existing liquidity goals.
Kathleen McAllister, the CFO and CEO of Transocean Partners, said that the company’s common shareholders will gain from a premium to the existing share price and get shares in a firm with notable financial flexibility, an improved market liquidity of RIGP shares and a proven access to capital. Moreover, they anticipate that common shareholders will also gain from Transocean`s more diverse and considerably larger fleet and its remarkable contract backlog.