Continental Focus, International Reach

Total to Buy Maersk Oil & Gas

Tuesday, August 22, 2017

Total, in what comes out to be more than a $7 billion deal, is acquiring Maersk Oil & Gas from AP Møller-Maersk. The purchase is being funded by a combination of $4.95 billion in shares and the assumption of $2.5 billion in Maersk debt.

Total will issue to AP Møller-Maersk 97.5 million shares in the company, based on Total’s average share price on the 20 business days prior to August 21, which will represent 3.75% of the enlarged share capital of Total.

Underpinning this 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, 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 Q1 2018 and has an effective date of July 1, 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 the deal gives Total Maersk’s holdings in Kenya, where its partners Tullow Oil and Africa Oil are ready to begin development of discovered resources. The Kenyan assets are complimentary to Total’s assets in Uganda which are also about to begin the development phase.

Commenting on the transaction, Patrick Pouyanne, Chairman and CEO of Total said, “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.  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 allowing 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.”

Pouyanné concluded, “This transaction is immediately accretive to both cash flow and earnings per share and delivers further growth over coming years. It is in line with our announced strategy to take advantage of the current market conditions and of our stronger balance sheet to add new resources at attractive conditions. By adding such a portfolio of growing conventional offshore North Sea assets, we confirm our strategy for value creation of, on the one hand, playing to our core strengths in order to grow further and, on the other hand, to constantly seek to lower our break-even by delivering significant synergies. This transaction will deepen and accelerate this strategy significantly, as Total will become a 3 Mboe/d major by 2019 to the benefit of all Total shareholders.”


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