Total buys Maersk Oil in $7.45bn deal

Global firm Total is to buy the oil and gas division of the Danish group, AP Moller-Maersk in a deal worth $7.45 billion.

The container shipping group says it’s divesting its interests in all energy-related businesses to focus more on its core transport and logistics businesses.

The deal may yet be the Maersk’s biggest single transaction yet in the first steps to break itself up.

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. It will also take over all decommissioning obligations, worth around $2.9 billion.

The transaction, expected to close in the first quarter of 2018, is subject to regulatory approval from the Danish Minister of Energy and a consultation process with Total employees.

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Maersk’s Danish energy-related businesses include drilling rig and oil tanker units, but owns one of the world’s largest container shipping line.

It gave itself a two-year deadline last September to achieve the break-up through sales, stock market listings, or mergers.

In efforts to strengthen its hold on the container business, Maersk had bought Hamburg Süd, the German operator with a strong position in Latin America, for $4bn.

According to Soren Skou, the firm’s chief executive, Maersk expects to make a gain of about $2.8bn from the deal, a portion of which will be returned to shareholders, subject to securing its investment-grade credit rating first. Shareholders could expect an extraordinary dividend, share buyback, or distribution of the Total shares Maersk will receive in the deal.

On his part, chief executive of Total, Patrick Pouyanne, said in July that the company had a “strong balance sheet” and would “take advantage of the low-cost environment by being able to launch profitable projects and acquire resources under attractive conditions”.

Total has proved more resilient than many other oil companies following the price slump that struck the industry from 2014, cutting costs faster and earlier, which is now allowing it to invest in new projects.

It would be recalled that Total had also recently signed signing a multibillion-dollar agreement to develop part of South Pars — the world’s largest gasfield shared between Iran and Qatar.

 

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