Transocean to Buy Rest of Transocean Partners in $514 Million Deal
August 01 2016 - 8:55AM
Dow Jones News
By Brittney Laryea
Swiss offshore drilling company Transocean Ltd. agreed to buy
back the master limited partnership that it formed two years ago,
under pressure from Carl Icahn, in a deal that values Transocean
Partners LLC at about $514 million.
Transocean, which owned nearly 52% of Transocean Partners common
stock, agreed to swap 1.1427 of its shares for each unit of the
master limited partnership. Based on the closing prices Friday, the
offer values Transocean Partners at $12.56 a share, a 15% premium
to stock's closing price of $10.92.
Transocean Partners's initial public offering was priced at $22
in the summer of 2014. At the time, forming master limited
partnerships had become a popular strategy for energy companies as
the structure enabled companies to forgo paying corporate income
tax. When Transocean first announced plans for the IPO, it made
other moves to placate activist investor Mr. Icahn, including a
dividend and a smaller board of directors.
However, the subsequent slump in oil prices caused energy
producers to dial back investment and exploration plans, prompting
two years of spending cuts, canceled projects and tens of thousands
of layoffs.
Transocean Partners, which traded as high as $29.43 in the weeks
following the IPO, hit a low of $5.89 in January. Transocean has
lost about 73% of its market value since the IPO. In premarket
trading, Transocean shares fell 1.2% to $10.86, while Transocean
Partners shares added 0.7% to $11.
Transocean Chief Executive Jeremy Thigpen said the deal
announced Monday would give Transocean the benefit of a "simplified
administration and governance" and cost savings. Under the deal,
Transocean expects to issue about 22.7 million shares.
The deal is subject to the customary approvals and conditions,
including the approval of more than half of the Transocean Partners
units not held by Transocean.
After the deal is completed -- expected in this year's fourth
quarter -- Transocean also would acquire 51% of ownership interests
in drillships Discoverer Inspiration, Discoverer Clear Leader and
Development Driller III, currently owned by Transocean
Partners.
Write to Brittney Laryea at brittney.laryea@wsj.com
(END) Dow Jones Newswires
August 01, 2016 08:40 ET (12:40 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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