Valaris (VAL) M&A announcement summary

Deal rationale and strategic fit

• Creates the world's highest-quality, most diversified offshore drilling fleet with 73 rigs, including 33 ultra-deepwater drillships, nine semisubmersibles, and 31 modern jackups, expanding global reach and customer access.

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

• Enhances customer offerings and ability to innovate in technically challenging environments.

• Expands customer base and geographic presence, supporting increased offshore activity worldwide.

• Reestablishes a valued relationship with Saudi Aramco through the ARO JV.

Financial terms and conditions

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

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

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

• Transaction is accretive on key financial metrics and accelerates deleveraging.

• Targeted leverage ratio of 1.5x within 24 months of closing.

Synergies and expected cost savings

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

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

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

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

• Cost savings are incremental to ongoing cost reduction initiatives.