Offshore Consolidation, Tidewater Index Inclusion & Other News

Noble Corporation Makes A Splash By Acquiring Diamond Offshore, Tidewater Pops On S&P 600 Inclusion & A Catalyst On The Horizon

I’m deviating a bit from my normal posting schedule, but there were a couple notable news items worth covering for readers. Two of them are focused on offshore oil services, and the other is a potential near-term catalyst for one of my other holdings.

Consolidation Comes To Offshore Oil Services

The energy sector continues the recent trend of consolidation, this time in the offshore oil services sector. Noble Corporation NE 0.00%↑ announced that they will be acquiring Diamond Offshore Drilling DO 0.00%↑ in a deal valued at $1.6B. They also announced a dividend increase of 25% to a quarterly payout of $0.50, putting the forward yield at 4.4%.

As part of the transaction, Diamond shareholders will receive 0.2316 shares of Noble, plus cash consideration of $5.65 per share for each share of Diamond stock, representing an 11.4% premium to closing stock prices on June 7, 2024. Upon closing, Diamond shareholders will own approximately 14.5% of Noble’s outstanding shares.

- Acquisition Press Release

I typically don’t put much stock in short term reactions to news, but when it comes to M&A, the acquirer usually sells off, especially if they are issuing shares. This is why it was interesting to see Noble up 6% today. We will see if the consolidation continues across the offshore sector, but today was a good day for the entire sector, not just the companies involved in the acquisition.

Tidewater Index Inclusion

Another company in the offshore sector that had a monster day is Tidewater TDW 0.00%↑. Shares were up 13% today with the news that the stock is being added to the S&P 600 small cap index. This isn’t a huge change to the business like the Noble acquisition, but it should be a tailwind for investor flows into the stock. I still think we have a long way to go to fair value, but I can’t complain about days like today for any stock that I own.

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