SCHEDULE: Transocean to Acquire Valaris in Offshore Drilling Merger

Transocean Ltd. and Valaris Limited have entered a definitive business combination agreement, with Transocean acquiring Valaris at an exchange ratio of 15.235 shares.

Summary

• Transocean Ltd. and Valaris Limited signed a Business Combination Agreement on February 9, 2026, for Transocean to acquire all issued and outstanding common shares of Valaris.
• The acquisition will occur at an exchange ratio of 15.235 Transocean shares for each Valaris share.
• The transaction is intended to qualify as a reorganization under Section 368(a) of the Internal Revenue Code for U.S. federal income tax purposes.
• Frederik W. Mohn, Perestroika AS, and Perestroika (Cyprus) Ltd. (Reporting Persons) beneficially own 96,918,301 Transocean shares, representing approximately 8.8% of the class.
• The Reporting Persons entered into a Support Agreement with Valaris, committing to vote their shares in favor of the business combination.
• Perestroika (Cyprus) Ltd. previously purchased 1,500,000 Transocean shares at a price of $4.02 per share on November 24, 2025, using cash from ongoing operations.
• Valaris's outstanding Restricted Stock Units (RSUs) and Performance Stock Units (PSUs) granted before the Agreement Date will vest and convert into Transocean shares at the Effective Time, with PSUs based on actual performance.
• New Valaris equity awards granted after the Agreement Date will be assumed by Transocean and convert into time-based Transocean incentives.
• The Business Combination will not constitute a change of control for Transocean's existing incentives.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this as a strategically positive move, consolidating market positions and potentially creating synergies. The score reflects the inherent complexities and execution risks associated with large-scale mergers, balanced by the clear strategic intent and shareholder support.

Positives

• The business combination creates a larger, potentially more competitive entity in the offshore drilling sector.
• Both Transocean's and Valaris's Boards of Directors have approved the agreement and recommend it to their respective shareholders, indicating strong internal support.
• The transaction is structured to qualify as a tax-neutral reorganization for U.S. federal income tax purposes, which can be beneficial for shareholders.
• Key shareholders, including Frederik W. Mohn and Perestroika, have signed a Support Agreement, committing to vote their shares in favor of the transaction, increasing the likelihood of shareholder approval.

Risks

• Failure to obtain the required approvals from both Transocean and Valaris shareholders could prevent the consummation of the business combination.
• The transaction is subject to Key Regulatory Approval(s) and CFIUS Approval, which may involve 'Burdensome Conditions' that could materially impact the combined entity or delay the closing.
• Potential for litigation from shareholders challenging the business combination, which could incur defense costs and potentially delay or prevent the transaction.
• The 'Outside Date' for closing is 12 months from the Agreement Date (February 9, 2026), with potential extensions, indicating a prolonged period of uncertainty.
• Integration risks associated with combining two large offshore drilling companies, including operational, cultural, and technological challenges.

Future Outlook

The business combination aims to create a combined entity by Transocean acquiring all Valaris shares. The parties intend for the transaction to qualify as a tax-neutral reorganization for U.S. federal income tax purposes. Post-merger, Valaris employees who remain with the combined entity will receive substantially comparable aggregate compensation and benefits for 12 months, along with severance benefits no less favorable than existing plans and service credit for new plans. Transocean will propose two current Valaris directors for election to its board.

Management Comments

• The Valaris Board has approved and declared advisable the Business Combination Agreement and determined its terms are fair and in the best interests of Valaris and its shareholders, recommending the Valaris Transaction Resolution.
• The Transocean Board has approved and declared advisable the Business Combination Agreement and determined its terms are fair and in the best interests of Transocean and its shareholders, recommending the Transocean Shareholder Resolutions.

Industry Context

StockSavvy.ai notes this merger reflects ongoing consolidation within the offshore drilling sector, driven by a pursuit of scale, operational efficiencies, and market leadership. The combination of Transocean and Valaris, two significant players, could lead to a more streamlined fleet, enhanced technological capabilities, and potentially stronger pricing power in a cyclical industry. This strategic move aims to optimize asset utilization and reduce overheads, positioning the combined entity to better navigate market fluctuations and capitalize on future demand for deepwater drilling services.

Comparison to Industry Standards

• The filing does not provide specific comparable companies, projects, or results to assess against global industry benchmarks. A detailed assessment would require comparing the combined fleet size, contract backlog, and financial leverage against other major offshore drillers like Diamond Offshore Drilling, Noble Corporation, or Seadrill.

Management Changes

Corporate Governance

Legal Proceedings

• The parties commit to defending against any lawsuits or other legal proceedings challenging or affecting the Business Combination.

Related Party Transactions

• Frederik W. Mohn, Perestroika AS, and Perestroika (Cyprus) Ltd. (Reporting Persons) entered into a Support Agreement with Valaris, committing to vote their shares in favor of the business combination. Frederik W. Mohn is a director of Transocean Ltd.

Stakeholder Impact

• Shareholders of Valaris will receive Transocean shares, becoming shareholders of the combined entity.
• Shareholders of Transocean will experience dilution due to the issuance of new shares for the acquisition.
• Employees of Valaris who continue employment will receive substantially comparable aggregate compensation and benefits for 12 months post-merger, along with severance benefits and service credit.
• Directors and officers of Valaris will resign or be removed, with two Valaris directors proposed for the Transocean Board, impacting leadership and governance.

Next Steps

• Valaris will apply to the Court for an Interim Order to convene the Valaris Court Meeting.
• Both parties will prepare and distribute a joint Proxy Statement to their respective shareholders.
• Valaris will hold the Valaris Court Meeting for shareholders to vote on the Valaris Transaction Resolution.
• Transocean will hold the Transocean Meeting for shareholders to vote on the Share Issuance Resolutions, Election Resolutions, and Additional Transocean Resolution.
• Valaris will apply for the Sanction Order from the Court following shareholder approvals.
• Transocean will file a Supplemental Listing Application with the NYSE for the newly issued shares.
• Transocean will file a registration statement on Form S-8 for converted Transocean equity awards.
• The parties will cooperate to obtain necessary binding Tax rulings from Swiss tax authorities.
• Valaris will cooperate with Transocean in arranging any necessary financing and discharging Valaris Notes.

Key Dates

Recommendation

The proposed business combination is a significant strategic move for Transocean and Valaris, aiming to create a larger, more integrated offshore drilling entity. While the strategic rationale for consolidation is clear, the success of the merger hinges on effective integration, realization of synergies, and favorable market conditions post-closing. Investors should hold their positions to monitor the progress of regulatory approvals, shareholder votes, and initial integration efforts before making further investment decisions, as the long-term value creation is yet to be fully demonstrated.

Keywords

Offshore drilling, Merger, Acquisition, Business Combination, Transocean, Valaris, SEC Filing, Schedule 13D, Shareholder Support, Corporate Governance, Energy Sector, Oil and Gas, Reorganization