Early Monday, Noble (NE) said it will acquire Diamond Offshore Drilling (DO) for $1.59 billion in cash and stock. The deal works out to $15.52 per DO share, or an 11.4% premium to Diamond's June 7 close.
Under the terms of the agreement, Diamond shareholders will receive 0.2316 share of Noble and $5.65 in cash for each DO share they own. Following the closing of the transaction, Diamond shareholders will own approximately 14.5% of Noble.
"This acquisition enables Noble to continue our journey of delivering superior innovation and value to a broad range of the leading offshore operators across the world," Noble CEO Robert Eifler said in a statement. "Our position will be strengthened with the addition of four 7th generation drillships and one of the most high-spec harsh environment semisubmersible rigs in the world."
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Noble said it expects the transaction to be "significantly and immediately" accretive to its free cash flow per share and will lead to $100 million in cost synergies, 75% of which is expected to be realized within the first year of closing. It added that the combined company would have a backlog of approximately $6.5 billion as of today.
The transaction is expected to close by the first quarter of 2025, Noble said.
"This combination is an ideal outcome that provides Diamond shareholders both immediate and long-term upside potential as part of a more fully scaled platform that can deliver customer and shareholder value on a through-cycle basis, more visibly and accessibly, while gaining access to Noble's robust dividend program," Diamond CEO Bernie Wolford said in a statement.
Speaking of Noble's dividend, the company also announced that its board of directors approved an interim dividend of 50 cents per share for the third quarter. This is in addition to its quarterly dividend of 40 cents per share.
Noble's bid marks more M&A activity in the energy sector
Noble's bid for Diamond Offshore Drilling marks a busy stretch of merger-and-acquisition (M&A) news in the oil patch that started last fall when Exxon Mobil (XOM) unveiled its $60 billion bid for Pioneer Natural Resources.
More recently, ConocoPhillips (COP) announced its acquisition of Marathon Oil (MRO).
Is Noble stock a buy, sell or hold?
Noble has underperformed on the price charts, with its 7.7% one-year total return (price change plus dividends) well below the S&P 500's 27.2% total return. Still, analysts remain bullish toward the oil stock.
According to S&P Global Market Intelligence, the consensus analyst target price for NE stock is $58.73, representing implied upside of more than 30% to current levels. Additionally, the consensus recommendation is a Strong Buy.
Related Content
-
Stock Market Today: Stocks Soar on China Trade Talk HopesTreasury Secretary Bessent said current U.S.-China trade relations are unsustainable and signaled hopes for negotiations.
-
2026 Disney Dining Plan Returns: Free Dining for Kids & Resort BenefitsPlan your 2026 Walt Disney World vacation now. Learn about the returning Disney Dining Plan, how kids aged three to nine eat free, and the exclusive benefits of staying at a Disney Resort hotel.
-
Stock Market Today: Stocks Soar on China Trade Talk Hopes
Treasury Secretary Bessent said current U.S.-China trade relations are unsustainable and signaled hopes for negotiations.
-
How Can Investors Profit From AI's Energy Use?Global energy demand is expected to grow by leaps and bounds over the next several years as AI usage accelerates. Here's how to get a piece of the pie.
-
Can Trump Fire Powell? A Supreme Court Case Could DecidePresidential posts threaten to overwhelm decades of precedent and tradition, whatever the nine justices decide.
-
What Are AI Agents and What Can They Do for You?AI agents promise to be the next big thing in artificial intelligence, but what exactly do they do?
-
Should You Buy an iPhone Now Before Tariffs Hit?Looming tariffs can make an iPhone purchase seem urgent. Here's what to do if you need another phone but want to save money.
-
SRI Redefined: Going Beyond Socially Responsible InvestingNow that climate change has progressed to a changed climate, sustainable investing needs to evolve to address new demands of resilience and innovation.
-
Here's When a Lack of Credit Card Debt Can Cause You ProblemsUsually, getting a new credit card can be difficult if you have too much card debt, but this bank customer ran into an issue because he had no debt at all.
-
33 Stocks That Could Rally 50% or More This YearAnalysts say these S&P 500 stocks have at least 50% price upside over the next year or so.
