SCHEDULE: Valaris, Transocean Announce Merger; OHA Backs Deal

Oak Hill Advisors has committed its 6.93% stake in Valaris Ltd to support the company's proposed merger with Transocean Ltd.

Summary

• Valaris Ltd and Transocean Ltd. have entered into a Business Combination Agreement.
• Transocean will acquire all issued and outstanding Valaris shares.
• Valaris shareholders will receive 15.235 Transocean shares for each Valaris share.
• The transaction will be effected by way of a court-approved scheme of arrangement under Bermuda law.
• Oak Hill Advisors (OHA) and its managed funds (Oak Hill Funds) entered into a Support Agreement with Transocean on February 9, 2026.
• OHA commits to vote its 4,797,337 beneficially owned Valaris shares, representing 6.93% of the class, in favor of the Business Combination.
• OHA's voting commitment is subject to certain conditions, including no adverse changes to the merger consideration.
• OHA has not engaged in any transactions with Valaris shares in the past 60 days.
• Joseph Goldschmid, an OHA employee and Valaris director, holds 5,358 unvested restricted stock units for OHA clients, over which he has no voting or investment control.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this as a moderately positive development, as a significant shareholder's explicit support for a major merger reduces uncertainty and signals confidence in the strategic direction.

Positives

• Oak Hill Advisors, a significant shareholder, has formally committed to supporting the merger, indicating strong institutional backing.
• The merger creates a combined entity, potentially leading to synergies and a stronger market position in offshore drilling.
• The fixed exchange ratio of 15.235 Transocean shares for each Valaris share provides clarity on the consideration Valaris shareholders will receive.

Negatives

• Oak Hill Funds are subject to transfer restrictions on their Valaris shares, limiting their ability to sell to certain parties (competitors or those opposing the merger) during the agreement term.
• The Support Agreement terminates if the Business Combination Agreement is amended to decrease or change the form of consideration, or otherwise adversely affect Valaris shareholders, introducing a condition for OHA's support.

Risks

• The Business Combination is subject to conditions outlined in the Business Combination Agreement, which could include regulatory approvals, shareholder votes, and court approval in Bermuda.
• An 'Adverse Recommendation Change' by the Valaris Board could lead to the termination of the Support Agreement, potentially jeopardizing the merger.
• The merger consideration is a fixed exchange ratio, meaning Valaris shareholders' ultimate value depends on Transocean's share price performance post-announcement and through closing.

Future Outlook

The filing details a definitive Business Combination Agreement between Valaris and Transocean, indicating a clear path towards a merger where Valaris shareholders will receive Transocean shares. The Support Agreement from Oak Hill Advisors signals strong institutional backing for the proposed transaction.

Management Comments

• Oak Hill Funds will vote the shares owned by them at the time of the Issuer's shareholder meeting with respect to the Business Combination in favor of the transactions contemplated by the Business Combination Agreement.
• The Support Agreement does not restrict the Oak Hill Funds from engaging in or consummating or entering into any agreement, arrangement or understanding to engage in or consummate any open market transactions with respect to the Support Shares.
• Mr. Goldschmid is deemed to hold the foregoing securities for the benefit of certain clients of OHA and accordingly holds no voting or investment control over the RSUs.

Industry Context

StockSavvy.ai notes that the offshore drilling industry has seen consolidation in recent years as companies seek scale, operational efficiencies, and stronger balance sheets in a volatile energy market. This proposed combination of Valaris and Transocean, two major players, aligns with this trend, aiming to create a larger, more competitive entity. The backing of a significant institutional investor like Oak Hill Advisors lends credibility to the strategic rationale of the merger.

Comparison to Industry Standards

• The merger of Valaris and Transocean creates a combined entity that will be a significant player in the offshore drilling sector, comparable to other large-scale consolidations seen in the industry, such as the merger of Ensco and Rowan to form EnscoRowan (now Valaris) in 2019, or the earlier merger of Transocean and GlobalSantaFe.
• The exchange ratio of 15.235 Transocean shares for each Valaris share will be evaluated by the market against recent M&A transactions in the sector, considering factors like asset quality, fleet utilization, and backlog.
• The 6.93% stake held by Oak Hill Advisors is a substantial institutional holding, and their explicit support for the merger is a positive signal, similar to how major institutional investors often play a pivotal role in approving large corporate transactions.

Related Party Transactions

• Joseph Goldschmid, an employee of Oak Hill Advisors (the reporting person) and a director of Valaris, received 5,358 unvested restricted stock units from Valaris. These RSUs are held for the benefit of OHA clients.

Stakeholder Impact

• Shareholders (Valaris): Will exchange their shares for Transocean shares, becoming shareholders of the combined entity. The value of their investment will depend on the Transocean share price and the successful completion of the merger.
• Shareholders (Transocean): Will see dilution from the issuance of new shares to Valaris shareholders, but potentially benefit from the strategic advantages of the combined entity.
• Employees: The merger of two large companies often leads to integration efforts that could impact employees, though no specifics are mentioned in this filing.
• Customers/Suppliers: The combined entity may offer a broader range of services or have different procurement strategies, potentially impacting existing customer and supplier relationships.

Next Steps

• Valaris shareholder meeting to vote on the Business Combination.
• Court approval of the scheme of arrangement in Bermuda.
• Consummation of the Business Combination, subject to conditions in the Business Combination Agreement.
• Vesting of Joseph Goldschmid's 5,358 RSUs on the earlier of June 13, 2026, or the next annual meeting of Valaris shareholders.

Key Dates

Recommendation

The filing confirms a definitive merger agreement and strong institutional shareholder support, which typically de-risks the transaction. However, the recommendation remains "hold" for existing Valaris shareholders as the value is now tied to the Transocean share price and the successful completion of the merger. For new investors, it's a "hold" until the full terms and synergies of the combined entity are clearer and the market fully digests the implications.

Keywords

Valaris, Transocean, Merger, Acquisition, Business Combination Agreement, Oak Hill Advisors, OHA, Schedule 13D, Offshore Drilling, Shareholder Support, Scheme of Arrangement, Equity Exchange