Total Buys Maersk Oil for $4.95 Billion -- 2nd Update
August 21 2017 - 4:31AM
Dow Jones News
By Sarah Kent and Dominic Chopping
French oil company Total SA has agreed to acquire Danish
conglomerate A.P. Moeller-Maersk A/S's oil unit for $4.95 billion,
the latest sign activity is returning to the sector following a
three-year slump in oil prices.
In statements released Monday, the companies said Total will
also assume $2.5 billion of Maersk Oil's debt.
The deal is the latest sign of consolidation in the oil-and-gas
industry, which is only now coming to grips with a prolonged and
painful downturn.
In 2016, Royal Dutch Shell PLC acquired smaller rival BG Group
in a roughly $50 billion deal. But speculation that the industry
could face another wave of megamergers fell flat.
Total said its acquisition of Maersk Oil will bolster its
production by 160,000 barrels a day in 2018 and add significant
volumes to its reserve base, primarily in the North Sea. It will
make the French oil company northwest Europe's second-largest
offshore operator.
The company expects benefits of more than $400 million a year
from the deal and said the transaction would immediately boost
earnings and cash flow per share. Once the deal is completed, Total
said it would consider removing the discount on its scrip dividend
to allow shareholders to feel an immediate benefit.
For Maersk, the deal concludes a review process that started
over a year ago as it looked to combat one of the worst shipping
down-cycles and a historic oil-price rout.
Maersk will retain an interest in the sector through 97.5
million shares in the French energy group, equal to approximately
3.76% of Total. The Danish company's main shareholder, A.P. Moller
Holding, could also get a board seat.
Total will take over all decommissioning obligations currently
amounting to $2.9 billion and will maintain Maersk Oil's position
in the North Sea with strong Copenhagen and Esbjerg bases. Denmark
will become the operating hub for Total's combined operations in
Denmark, Norway and the Netherlands.
The deal remains subject to approval by Total's shareholders,
employee representatives and relevant regulatory authorities.
Maersk shares were up 2.2% early Monday, while those in Total
were 0.7% lower.
Write to Sarah Kent at sarah.kent@wsj.com and Dominic Chopping
at dominic.chopping@wsj.com
(END) Dow Jones Newswires
August 21, 2017 04:16 ET (08:16 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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