French energy giant snaps up Maersk Oil for $7.45b

A.P. Moller-Maersk signed an agreement to sell its oil and gas division, Maersk Oil, to Total, which will significantly strengthen the French energy giant’s operations in the North Sea and elsewhere.    Danish shipping conglomerate A.P. Moller-Maersk signed an agreement today to sell Maersk Oil to French energy giant Total for $7.45 billion in a combined share and debt transaction, the companies said.
   A.P. Moller Maersk will receive a consideration of $4.95 billion in Total shares – amounting to 97.5 million Total shares, or about 3.8 percent of the company – and Total will assume $2.5 billion of Maersk Oil’s debt.
   As part of the transaction, Total will assume decommission obligations of $2.9 million, A.P. Moller-Maersk said.
   The transaction is expected to close during the first quarter of 2018 and has an effective date of July 1, 2017.
   A.P. Moller-Maersk said the deal is subject to regulatory approval from the Danish Minister of Energy, Utilities and Climate; competition authorities; as well as required consultation and notification processes with Total S.A.’s employee representatives.
   Total said the transaction will bolster its production by 160,000 barrels a day in 2018 and strengthen its operations in the North Sea. The company expects the transaction to result in financial synergies of over $400 million per year.
   “This transaction is immediately accretive to both cash flow and earnings per share and delivers further growth over coming years,” Total Chairman and CEO Patrick Pouyanné said.
   “The combination of Maersk Oil’s North Western Europe businesses with our existing portfolio will position Total as the second operator in the North Sea with strong production profiles in UK, Norway and Denmark, thus increasing exposure to conventional assets in OECD countries,” he said. “Internationally, in the US Gulf of Mexico, Algeria, East Africa, Kazakhstan and Angola there is an excellent fit between Total and Maersk Oil’s businesses allowing for value accretion through commercial, operating and financial synergies.”
   For A.P. Moller-Maersk, the move is part of its restructuring strategy, which involves it focusing more on transport and logistics.
   “The separation of the energy businesses was decided as part of last year’s strategic decision to focus A.P. Moller-Maersk’s future activities on transport and logistics, as well as a result of recent years’ oil and gas industry and market developments,” the conglomerate said. “Maersk Oil is the first of the four energy companies of A.P. Moller-Maersk for which a future structural solution has now been identified. The solutions for Maersk Drilling, Maersk Supply Service and Maersk Tankers remain to be defined before the end of 2018.”