Project Description

Spin-off Overview

On August 19, 2018, A.P. Moeller-Maersk (CPH: MAERSK-B) announced that it would be spinning off its Oil Drilling business. Expected timing is Q3 2019.

Source: A.P. Moeller-Maersk Slide Deck

Background:

From Bloomberg:

A.P. Moeller-Maersk is planning to spin off its drilling unit instead of pursuing a sale as the Danish conglomerate shifts focus to its transport activities, according to people familiar with the matter.

The world’s biggest shipping company may announce the business separation as early as Friday, the people said, asking not to be identified because the discussions are private. Maersk is likely to opt for a spinoff after takeover bids for the unit were deemed too low, the people said. No final decision has been made and the exact structure of the separation wasn’t immediately clear.

Maersk has been shedding energy units to focus on its transport business, giving itself until the end of this year to streamline its structure. In 2017, it agreed to sell its oil and gas business and tanker operations for almost $10 billion combined, leaving its drilling arm and a supply-service unit.

Maersk held talks about selling the drilling business to oilfield-services company Rowan Cos. last year in a deal that may have valued the assets at about $4 billion if it had gone ahead, people familiar with the matter said at the time.

Maersk Drilling, which employs about 4,000 people, specializes in large rigs that can work in harsh environments. Its fleet includes about 15 jack-up rigs, four semi-submersibles and four drill-ships. Maersk took a $1.75 billion impairment on the unit in November and reclassified it as “discontinued operations,” signalling a sale had moved closer.

Maersk issued a profit warning this month, lowering its full-year outlook based on higher fuel costs and its estimates for freight rates for the rest of the year. Container-shipping companies worldwide face a $7 billion increase in fuel costs this year as oil prices climb, said Nilesh Tiwary, an analyst at Drewry Maritime Financial Research, in July.

Company Resources:

Press Release – August 17, 2018

Slide Deck – August 17, 2018

Articles

Bloomberg – Maersk said to Plan Drilling Unit Spin-off to Focus on Transport– August 16, 2018