On Monday, Evercore ISI maintained its Outperform rating and $67.00 stock price target for Noble Corporation (NYSE:NE). The firm's stance comes as Noble Corporation is set to acquire Diamond Offshore in a deal that combines stock and cash, totaling a $600 million payout to Diamond Offshore shareholders.
This transaction offers a 11.4% premium over Diamond's stock price as of June 7, 2024, which will result in Diamond shareholders owning approximately 14.5% of Noble's shares post-merger.
The deal stipulates that Diamond Offshore shareholders will receive 0.2316 shares of Noble and $5.65 in cash for each share of Diamond they hold. To finance the cash portion of the acquisition, Noble has arranged for a $600 million bridge financing facility. Diamond Offshore's current assets include 12 offshore floaters, with four advanced 7th generation drillships that command an average day rate of $460,000, and a backlog worth $2.1 billion.
Following the merger, Noble's fleet will expand to 41 offshore rigs, encompassing 28 floaters and 13 jackups. The company's backlog will increase to $6.5 billion. Moreover, Noble anticipates annual pre-tax cost synergies of $100 million, with 75% expected to be realized within the first year after the transaction closes. The acquisition is projected to be immediately beneficial to Noble's free cash flow per share.
The completion of this strategic acquisition is expected by the first quarter of 2025. It aims to enhance Noble's position by adding 12 offshore floaters to its fleet, which is anticipated to bolster the company's revenue and cash flow during a prolonged offshore upcycle.
In other recent news, Noble Corporation has maintained its Buy rating with a $63 target price, following the announcement of a significant acquisition. The $2 billion deal will increase Noble Corporation's fleet with the addition of several high-specification drillships and semi-submersibles. The transaction is expected to be completed by the first quarter of 2025, with an anticipated increase in EBITDA per share by 2026.
In addition to the acquisition, Noble Corporation has reported a strong first-quarter performance in 2024, with adjusted EBITDA reaching $183 million, marking a 32% year-over-year increase. The company has also declared a second-quarter dividend of $0.40, reflecting a commitment to consistent shareholder returns.
These developments are part of the company's ongoing strategic projects and contract preparations. The recent contract signings have increased the firm's backlog by approximately $210 million, culminating in a total backlog of $4.4 billion. Noble Corporation anticipates an uptick in free cash flow for the full year of 2024, with plans to return the majority of this to shareholders through dividends and buybacks.
InvestingPro Insights
As Noble Corporation (NYSE:NE) moves forward with its acquisition of Diamond Offshore, the real-time financial metrics and analyst insights from InvestingPro provide a clearer picture of the company's current market position. With a market capitalization of $6.35 billion and a positive revenue growth of 45.87% over the last twelve months as of Q1 2024, Noble appears to be on a strong financial trajectory. The company's low PEG ratio of 0.61 suggests that its earnings growth rate is robust relative to its P/E ratio, which stands at an attractive 13.28, indicating potential value for investors.
InvestingPro Tips reveal that analysts have recently revised their earnings expectations downwards for the upcoming period, yet they predict Noble Corporation will remain profitable this year. Moreover, the company's stock has been noted for its low price volatility, which could be appealing for investors seeking stability. Noble's liquid assets also exceed its short-term obligations, highlighting a solid financial footing as it integrates Diamond Offshore's assets.
For investors interested in a deeper dive into Noble Corporation's financials and future prospects, InvestingPro offers additional insights and tips. By using the coupon code PRONEWS24, readers can access these resources with an extra 10% off a yearly or biyearly Pro and Pro+ subscription. With the next earnings date set for July 31, 2024, keeping an eye on Noble's performance post-merger will be crucial for assessing the acquisition's impact on the company's market position and growth trajectory.
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