Business Context and Reporting Period
Seadrill Limited filed this Form 6-K on December 22, 2022, for the month of December 2022. Seadrill is a Bermuda-based offshore drilling contractor with a fleet serving shallow- to ultra-deepwater markets.
Proposed Aquadrill Combination
- Seadrill entered into an Agreement and Plan of Merger with Aquadrill LLC and Seadrill Merger Sub, LLC.
- Merger Sub will merge with and into Aquadrill, with Aquadrill surviving as a wholly owned subsidiary of Seadrill.
- Aggregate consideration is expected to total 30,645,160 Seadrill common shares, including shares payable under an Aquadrill sale bonus arrangement. The share count may be reduced if Aquadrill RSU holders elect cash; Seadrill does not expect this reduction to exceed 200,000 shares.
- Holders representing more than 75% of Aquadrill’s outstanding common units signed a Voting and Support Agreement and delivered written consent approving the transaction. No further Aquadrill member vote is required, and Seadrill shareholder approval is not required for the merger itself.
- Seadrill has agreed to seek approval at its annual general meeting, to be held before March 31, 2023, to increase its board by two members and appoint two individuals designated by certain consenting Aquadrill members, subject to specified qualifications.
Financial Metrics and Liquidity
This filing is principally a merger announcement and does not provide current or comparable-period revenue, profit, cash flow, margins, debt, liquidity, backlog, or other operating financial metrics. The filing text does not provide a clear value for these measures.
Material Changes Versus the Prior Comparable Period
No period-over-period financial comparison is presented. The material development is Seadrill’s agreement to acquire Aquadrill through a share-based merger and the planned expansion of Seadrill’s board.
Conditions, Outlook, and Risks
- Closing remains subject to customary conditions, including regulatory and antitrust clearance, effectiveness of an SEC Form F-4 registration statement, registration rights arrangements, listing approvals on the New York Stock Exchange and Oslo Stock Exchange, absence of legal restraints or a material adverse effect, and compliance with contractual covenants.
- The merger may be terminated under specified circumstances, including mutual agreement or failure to close by September 30, 2023.
- Management identifies potential synergies and benefits from combining the companies but does not quantify them in this filing.
- Key transaction and business risks include regulatory delays or conditions, the ability to operate Aquadrill’s rigs outside its existing management structure, offshore drilling market conditions, day rates, customer demand, contract awards, rig mobilization, maintenance and capital-project costs, financing access, loan-covenant compliance, liquidity, cash-flow adequacy, oil prices, interest and exchange rates, tax and legal matters, environmental and climate regulation, cybersecurity incidents, and the ability to retain personnel and maintain customer and supplier relationships.
- Both companies had emerged from Chapter 11 proceedings, and the filing highlights the need to maintain adequate financing to support their post-emergence business plans.
Important Facts for Investors to Verify
- Whether all merger conditions are satisfied, including antitrust clearance and effectiveness of the Form F-4 registration statement.
- The final number of Seadrill shares issued, including any reduction resulting from Aquadrill RSU cash elections.
- The timing of closing and whether the transaction closes by the September 30, 2023 termination date.
- The final composition and size of Seadrill’s board following the annual general meeting.
- The combined company’s pro forma revenue, profitability, leverage, liquidity, backlog, capital expenditures, and expected synergies, which are not provided in this filing.
- The definitive merger agreement, Voting and Support Agreement, Form F-4, and subsequent SEC filings for complete terms, disclosures, and risk factors.