Total announced the acquisition of Maersk Oil & Gas A/S, a wholly owned subsidiary of A.P. Møller – Mærsk A/S, in a share and debt transaction. The transaction is subject to Total shareholders’ approval of the agreement.
The proposed transaction is subject to the applicable legally required consultation and notification processes for employee representatives and to approvals by the relevant regulatory authorities. The transaction is expected to close in the first quarter of 2018 and has an effective date of 1st July 2017.
Under the agreed terms, A.P. Møller – Maersk will receive a consideration of USD4.95 billion in Total shares. Further, Total will assume USD2.5 billion of Maersk Oil’s debt. Total will issue to A.P. Møller – Maersk A/S, 97.5 million of shares, based on the average Total share price on the 20 business days prior to August 21 (the signing date of the agreement), which will represent 3.75% of the enlarged share capital of Total. Total has also offered the possibility of a seat on its Board of Directors to A.P. Møller Holding A/S, main shareholder of A.P. Møller – Mærsk.
The combination with Maersk Oil offers Total an exceptional overlap of upstream businesses globally which will enhance Total’s competitiveness and value in many core areas, in particular through some high quality growth assets and through the delivery of synergies.
Specifically, the transaction will bring around 1 billion barrels of oil equivalent (boe) of 2P/2C reserves, 85% of which are in OECD countries (more than 80% in the North Sea), contributing to Total’s continuous balancing of country risks of its portfolio to enhance shareholder value. The addition of 160,000 boe per day of mainly liquids production in 2018, acquired at an average price of USD46 per boepd, offering high margins with an estimated free cash flow breakeven of less than USD30 per barrel and growing to more than 200,000 boepd by the early 2020’s further strengthens Total’s leading production growth outlook.
Total expects to generate operational, commercial and financial synergies of more than USD400 million per year, in particular by the combination of assets of Total and Maersk Oil in the North Sea, an area of excellence for both companies.
The transaction is immediately accretive to both earnings and cash flow per share underpinning Total’s dividend profile.
At closing of the transaction, in order that Total’s shareholders benefit from the accretive impact of the acquisition of Maersk Oil on earnings and cash flow, the Board of Directors of Total will consider removing the discount offered on the scrip dividend.
Commenting on the transaction, Patrick Pouyanne, Total chairman and CEO said, “This transaction delivers an exceptional opportunity for Total to acquire, via an equity transaction, a company with high-quality assets which are an excellent fit with many of Total’s core regions. 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 the UK, Norway and Denmark, thus increasing exposure to conventional assets in OECD countries. Internationally, in the U.S. 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.
We are also very pleased that we will have a new anchor point in Denmark which will host our North Sea Business Unit and supervise our operations in Denmark, Norway and the Netherlands. We intend to build on the strong operational and technical competencies of the Maersk Oil teams in the same way we managed to do it in Belgium with the teams of Petrofina in the refining & chemical businesses.”