Valaris (VAL) M&A announcement summary

Deal rationale and strategic fit

• Creates the world's largest offshore drilling company with a diversified, high-specification fleet of 73 rigs, including 33 ultra-deepwater drillships, nine semisubmersibles, and 31 modern jackups, and global reach.

• Positions the combined company to capitalize on a multi-year offshore drilling upcycle and growing customer demand.

• Expands reach, customer base, and access in key offshore basins worldwide, including new geographies and relationships such as the ARO JV with Saudi Aramco.

• Enables operation of any rig at any water depth, leveraging complementary assets and expertise for enhanced customer offerings and innovation.

• Both boards unanimously approved the transaction, aiming to maximize shareholder value and future upside.

Financial terms and conditions

• All-stock, all-equity transaction valued at approximately $5.8 billion, with an exchange ratio of 15.235 shares for each target share.

• Pro forma enterprise value of about $17.2 billion and market capitalization of $12.3 billion; post-deal ownership split: 53% acquirer, 47% target.

• Pro forma backlog exceeds $10 billion, providing strong cash flow visibility.

• The deal is accretive to free cash flow and earnings per share, and accelerates deleveraging with a targeted leverage ratio of about 1.5x within 24 months of closing.

Synergies and expected cost savings

• Over $200 million in annual cost synergies identified, additive to ongoing cost reduction initiatives.

• Synergies are expected to add more than $1.5 billion in value when capitalized, about 15% of combined market cap.

• Most savings will come from operational efficiencies, consolidating operations, supply chain savings, and eliminating redundant G&A.

• Ongoing cost-reduction program expected to reduce costs by more than $250 million through 2026.