Maersk Drilling in Denmark and Noble Corp, the U.S. competitor, will merge in a $3.4B deal

They announced Wednesday that they would form one of the largest offshore oil drilling companies in the world.

The combined company will be able to save $125 million annually and it will adopt Noble Corporation’s name. It will be based in Houston, Texas and split 50-50 among the existing shareholders.

In a statement, Chuck Sledge, Noble board chair and Maersk Drilling chairman said that the combination would create an offshore drilling company with significant global scale and strong balance sheets.

A majority of the shareholders at both companies support the transaction and the new entity’s shares are expected to be listed in New York and Copenhagen according to a joint statement.

Robert Eifler, Noble Chief Executive Officer, will be the CEO of the merged company.

To maintain close customer contact and support operations in Norway and the wider North Sea region, the company will keep a substantial operating presence in Stavanger.

Companies said that the merger would result in job losses and cost reductions, but did not specify numbers.

Jorn Madsen, CEO Maersk Drilling, stated that while the combination will have a negative impact on our organization in the short term, it will create a stronger and more profitable company that will offer future growth opportunities and new jobs.

Although the deal was “primarily” an all-shares transaction Maersk Drilling shareholders can choose to receive cash instead for up to $1,000 each subject to a $50 million aggregate cap.

Maersk spokeswoman said that the company had calculated the combined market capitalization of both companies at $3.4 billion.

Robert Uggla (chief executive of A.P.) stated that the combined company would have an industry-leading balance, significant cost synergies and a modern fleet, as well as access to an international shareholder base. Moller Holding, Maersk Drilling’s biggest shareholder.

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