Total To Pay $7.45bn for Maersk Oil

Robyn Valdez
August 21, 2017

Maersk is the oil and gas division of Danish giant AP Moller-Maersk, which is shedding its energy branches as it refocuses on transport and logistics.

The company expects benefits of more than $400 million a year from the deal and said the transaction would immediately boost earnings and cash flow per share.

Total will pay for Maersk Oil with a mix of shares and debt takeover.

As part of the deal, Maersk will receive approximately $4.95 billion in Total shares, while Total will assume $2.5 billion of short term debt to fund the remainder of the deal.

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Maersk lost out to Total in June, when the French company won a 30 per cent stake in a 25-year agreement to operate Qatar's largest offshore field, Al Shaheen, which is currenlty run by Maersk and whose license expires this year.

Until Total's deal on Monday, numerous acquirers were private-equity firms and smaller players, eager to get a foothold major oil hubs like the North Sea.

For Total, the deal builds on its large existing presence in the North Sea and means it will become the second-largest exploration firm in the region, behind Norway's Statoil.

Total CEO Patrick Pouyanne called the transaction an "exceptional opportunity". Crude oil prices remain stuck at about $50 a barrel - half the level three years ago - and some notable traders see the outlook for 2018 weakening. Building on Maersk Oil's high safety standards, strong technological leadership, operational excellence and strong Danish heritage, we will intensify and accelerate the push to optimise and extend the Danish oil and gas production. Total S.A. will take over all decommissioning obligations now amounting to United States dollars 2.9bn.

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Total will issue to Maersk 97.5 million shares, representing 3.75 percent of its enlarged share capital. The transaction is expected to close during the first quarter of 2018 and has an effective date of July 1, 2017. It has also offered the possibility of a seat on its board to A.P. Moller Holding A/S.

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.

Total said it would make Denmark its new operating hub for Total's combined operations in Denmark, Norway and the Netherlands.

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