LONDON, UK / ACCESSWIRE / November 23. 2016 / Active Wall St. blog coverage looks at the headline from Transocean Ltd. (NYSE: RIG) ("RIG") as the company announced on November 22, 2016, that it would put forth a much more enticing deal for acquiring the balance interest in Transocean Partners LLC (NYSE: RIGP) ("RIGP"). The counter offer comes after RIG failed to get required approval from outstanding common unit shareholders of RIGP for the merger of RIG and RIGP. Register with us now for your free membership and blog access at: http://www.activewallst.com/register/.

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Offer and counter offer

The RIG/ RIGP merger is a share-for-unit merger transaction. RIG owns approximately 52% or 21.3 million common units in RIGP. Approximately 19.7 million common units are not owned by RIG and the merger is about buying these common units. For the merger to go through 50.1% of the 19.7 million common unit's shareholders (9.9 million shares approximately) need to approve the deal. RIG's earlier attempt had failed as it could not get the necessary shareholder's approvals.

RIG has now increased the offer of 1.2 RIG shares for each RIGP common unit to entice the shareholders. If the deal goes through, RIG will issue 23.8 shares in the merged entity. The transaction is subject to approvals associated with master limited partnership (MLP) regulations. The deal is expected to close in early December 2016 if all approvals are in place.

A special meeting has been convened by RIGP on December 06, 2016, to discuss this matter at its office in London, UK.

The revised offer by RIG has been vetted by the Conflicts Committee formed by the Board of Directors of RIGP. The members of the committee are independent members of the Board and are not affiliated to RIG in any manner. The Board of Directors of RIGP, including the members of the Conflicts Committee, have entreated the common unit's shareholders to vote favoring the merger between RIG and RIGP.

Once the merger is finalized RIG will gain RIGP's 51% ownership in drillships Discoverer Inspiration, Discoverer Clear Leader, and Development Driller III.

Background

Switzerland-based RIG is the world's largest offshore contract drilling services provider for oil and gas wells and has a market capital of over $4.2 billion. It owns and operates a fleet of 57 mobile offshore drilling units. In addition, the company has five ultra-deepwater drillships and five high-specification jackups under construction or under contract to be constructed.

London, UK-based Transocean Partners LLC is a master limited partnership (MLP) company and it is jointly owned by Transocean Partners Holdings Limited and a subsidiary of Transocean Ltd. RIG took the MLP route to improve its near-term liquidity position, have greater financial flexibility, and to take advantage of tax benefits. The decision to form an MLP was to tackle the pseudo war started by investor Carl Icahn. The company was listed in NYSE in 2014. Following the IPO, the energy sector witnessed a huge slump due to the drop in oil prices, which in turn affected investment plans resulting in spending cuts, postponing or cancellation of projects, and employee layoffs.

In August 2016, RIG announced that it would buy back the common units that it did not own under pressure from investor Carl Icahn. At this point in time, RIGP was valued at $514 million approximately. RIG offered a share to unit swap, wherein it offered 1.1427 RIG shares for each RIGP common unit.

Stock Performance

On Tuesday, the stock closed the trading session at $11.53, slipping 1.11% from its previous closing price of $11.66. A total volume of 14.79 million shares have exchanged hands, which was higher than the 3-month average volume of 14.48 million shares. Transocean Ltd.'s stock price advanced 14.05% in the last month, 15.18% in the past three months, and 14.05% in the previous six months. Shares of the company have a PE ratio of 3.60.

Following the announcement of the revised offer, Transocean Partners LLC's share price finished yesterday's trading session at $13.75, jumping 5.69%. A total volume of 1.72 million shares exchanged hands, which was higher than the 3 months average volume of 250.21 thousand shares. The stock has advanced 20.27% in the last month, 21.93% in the past three months, and 19.66% in the previous six months. Furthermore, since the start of the year, shares of the company have surged 78.30%. The stock is trading at a PE ratio of 5.71 and has a dividend yield of 10.55%.

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SOURCE: Active Wall Street