Rowan in talks to acquire Maersk Drilling, sources say

By Manuel Baigorri, Dinesh Nair and Matthew Monks on 9/25/2017

LONDON and NEW YORK (Bloomberg) -- Drilling firm Rowan Cos. is in talks to acquire the drilling business of A.P. Moller-Maersk A/S, which is selling energy assets to focus on transportation, people familiar with the matter said.

The drilling business assets could be valued at about $4 billion, although the valuation could change as the talks proceed, the people said, asking not to be identified as the information is private. Rowan, an offshore contract driller, has a market value of $1.4 billion, down from $5.6 billion in 2011, when oil sold for more than $100/bbl.

Talks between Houston-based Rowan and Maersk, the owner of the world’s largest container shipping line, are ongoing and could still fall apart, the people said. The drilling assets also have attracted interest from other offshore drilling companies and other potential buyers may still emerge, the people said.

Optimism that the worst is over for the oil market has prompted a flurry of deals in the offshore rig industry this year. In May, Ensco Plc, the world’s second-largest offshore rig contractor by market value, agreed to buy rival Atwood Oceanics Inc. in an all-stock deal worth about $863 million. In August, Transocean Ltd. agreed to acquire Songa Offshore for $3.4 billion.

Spokeswomen for Copenhagen-based Maersk and Rowan declined to comment.

Maersk has already agreed to sell two other energy units in as many months. In August, Total SA said it would buy the company’s oil and gas unit for $7.45 billion, with two-thirds of the amount being paid through shares in the French company. On Sept. 20, Maersk announced the sale of its tankers unit to its holding company, APMH Invest A/S, for $1.17 billion.

Maersk has 24 drilling rigs, including drillships, deepwater semi-submersibles and high-end jack-up rigs, according to its website. It employs about 3,200 people and the business generated a profit of about $743 million last year.

At an energy industry conference organized by Barclays Plc this month, Rowan CEO Tom Burke said the company would consider acquisitions with an “industrial logic, ” which he said could include high-end drillships and high-end jack-up rigs. Any potential corporate transactions “would ideally be strategic, accretive, credit enhancing and should not dilute asset quality,” Burke said.

Brent crude oil rose Monday to the highest in more than eight months after OPEC said it’s well on the way to clearing a global glut. The active contract last traded at $57.90/bbl.

Rowan climbed 7.5% to $12.27 at 11:05 a.m. in New York after surging as much as 15% on the Bloomberg News report of the Maersk talks. The company had cash and equivalents of about $1.15 billion as of June 30. Maersk climbed 3.1% to close at 12,480 kroner in Copenhagen.


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