On August 21, 2017, Total (NYSE: TOT) announced that the Boards of Total and A.P. Moller Maersk had approved for Maersk Oil & Gas to be acquired by Total in a share and debt transaction. As a part of the agreement, A.P. Moller Maersk will receive $4.95 billion in Total shares. Simultaneously, Total will assume $2.5 billion of Maersk Oil’s debt.
Total is expected to issue 97.5 million shares based on the average price of total Share for the 20 business days prior to August 21. The amount will equate to the 3.75% of the enlarged share capital of Total. Total will also offer the possibility of a seat on its Board of Directors to A.P. Moller Holding A/S, which is the main shareholder of A.P. Moller Maersk. This will need approval from Total shareholders.
The transaction is expected to close during the first quarter of 2018. Total believes that combining with Maersk Oil will improve the company’s competitiveness and value in many areas. Total believes that it will be able to generate synergies of more than $400 million each year thanks to the acquisition.
The transaction will be immediately accretive to earnings and cash flow per share. Total Board of Directors will consider removing the discount offered on the scrip dividends in order to ensure that shareholders benefit from the acquisition of Maersk Oil.