Total acquires Maersk Oil for $7.45bn in a share and debt transaction

Total, a leading international oil and gas company, has announced that its board and that of A.P. Møller – Mærsk, a Danish shipping and oil and gas giant, have both approved the acquisition of 100 percent of the equity of the E&P company Maersk Oil & Gas A/S (Maersk Oil), a wholly owned subsidiary of A.P. Møller – Mærsk A/S, by Total in a share and debt transaction.

Under the agreed terms, A.P. Møller – Maersk will receive a consideration of $4.95 billion in Total shares and Total will assume $2.5 billion of Maersk Oil’s debt.

Total would also 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 (signing date) which will represent 3.75 percent of the enlarged share capital of Total.

Underpinning the share based partnership, subject to Total shareholders’ approval, 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 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 first quarter 2018 and has an effective date of 1st July 2017.

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 growing assets and through the delivery of synergies.

Total expects to generate operational, commercial and financial synergies of more than $400 million per year, in particular by the combination of assets of Total and Maersk Oil in 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.

“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 UK, Norway and Denmark, thus increasing exposure to conventional assets in OECD countries,” Patrick Pouyanne, Chairman and CEO of Total, said on the business combination.

He added that 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, which allows 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.”