Transocean Acquires Valaris in $5.8 Billion All-Stock Offshore Drilling Deal

Transocean to Acquire Valaris in $5.8 Billion All-Stock Deal

Transocean Ltd. has entered into a binding agreement to purchase Valaris Limited, a competing offshore drilling company, through an all-stock deal valued at approximately $5.8 billion. This merger will unite two of the most advanced offshore rig fleets, creating a single, global leader in the sector. The combined entity will have an estimated enterprise value of $17 billion and a pro forma market capitalization of $12.3 billion.

Transaction Details and Shareholder Impact

According to the agreement, each Valaris share will be exchanged for 15.235 shares of Transocean. Once the deal is finalized, Transocean shareholders will own about 53% of the new company, while Valaris shareholders will hold the remaining 47%. The transaction is anticipated to close in the latter half of 2026, pending regulatory and shareholder approvals.

Formation of a Leading Offshore Drilling Fleet

The merger will result in what both companies describe as the world’s premier offshore drilling fleet, comprising 73 rigs across all key offshore categories. This includes 33 ultra-deepwater drillships, nine semisubmersibles, and 31 modern jackup rigs, providing the new company with a strong presence in deepwater, harsh-environment, and shallow-water markets.

Expanded Global Reach and Market Opportunities

Company executives highlight that the enlarged fleet will enhance service capabilities in the most active offshore regions, including the U.S. Gulf of Mexico, Brazil, West Africa, the Middle East, and the North Sea. This expansion comes as offshore investments are rebounding after a prolonged period of underinvestment.

Financial Strength and Synergies

The combined company’s backlog is projected to be around $10 billion, offering improved cash flow predictability as energy operators increasingly pursue long-term offshore projects to offset declining output and bolster supply security.

Transocean anticipates realizing over $200 million in identified cost synergies from the merger, supplementing an ongoing cost-reduction initiative aiming for more than $250 million in cumulative savings by 2026. The company expects the deal to boost cash flow, speed up debt reduction, and provide greater financial flexibility, targeting a leverage ratio of roughly 1.5x within two years post-closing.

Additional Benefits and Leadership Structure

Beyond cost efficiencies, management points to enhanced trading liquidity and a stronger profile in capital markets, which could broaden the investor base and increase eligibility for additional equity indices.

The new company will be led by Keelan Adamson, currently President and CEO of Transocean, while Jeremy Thigpen, the present CEO, will become Executive Chairman of the Board. The board will consist of nine directors from Transocean and two from Valaris. Transocean will continue to be incorporated in Switzerland, with its main administrative office in Houston.

Deal Approval and Industry Context

The acquisition will proceed through a court-sanctioned scheme of arrangement under Bermuda law and has received unanimous approval from both companies’ boards. Major shareholders on both sides have committed to supporting the transaction.

This merger is part of a broader trend of consolidation in the offshore drilling industry, as companies seek greater scale, improved pricing power, and operational efficiencies amid a tightening supply of high-specification rigs. After enduring years of bankruptcies and restructuring following the 2014 oil price downturn, offshore drillers are now benefiting from higher dayrates and longer contract terms as oil producers return to offshore projects.

By merging Transocean’s expertise in deepwater and harsh environments with Valaris’ strength in jackup rigs, the combined company aims to become a comprehensive offshore contractor, capable of operating in any offshore setting or water depth.

By Charles Kennedy for Oilprice.com