Maersk Oil has been sold to Total for $7.45bn in a combined share and debt transaction, as per an agreement signed between AP Møller - Mærsk (APMM) and Total. Total will take over Maersk Oil’s entire organisation, portfolio, obligations, and rights with minimal pre-conditions. Planned development schedules and investments in strategic and sanctioned projects will be upheld, particularly in the Danish part of the North Sea. The agreement is subject to regulatory approval from relevant authorities, including the Danish Minister of Energy, Utilities and Climate, with closing expected to take place during the first quarter of 2018. As a consequence of the transaction, Maersk Oil will be classified as held-for-sale and discontinued operations in the Interim Report Q3 2017 for APMM. APMM’s financial guidance for 2017 remains unchanged except for the effect of the reclassification of Maersk Oil.
The agreement has significant repercussions: not only will this create Denmark as a regional hub for all Total’s operations in Denmark, Norway and the Netherlands based on Maersk Oil’s capabilities and strong position in the North Sea region, but it also shows APMM taking a material step on last year’s strategic decision to set up an integrated transport and logistics company by separating out its oil and oil-related activities. The strengthening of APMM’s financial flexibility also allows for additional resources and focus on future growth in container shipping, ports, and logistics, and builds on its role as the main operator in the Danish North Sea for half a century, allowing Denmark to be self-sufficient within oil and gas. With a structural solution for Maersk Oil now defined, APMM will now turn to solutions for three more companies which will be defined before the end of 2018—Maersk Drilling, Maersk Supply Service, and Maersk Tankers.
As per the stock exchange announcement, APMM will receive an enterprise value per 30 June 2017 of $7.45bn paid by 97.5m shares in Total with a value of $4.95bn equal to approx. 3.76% of Total (post-issuing shares to APMM). In addition to the shares, Total is assuming a short-term debt of $2.5bn via debt push down from APMM into Maersk Oil. Total will pay an interest of 3% pa of the enterprise value from 30 June 2017 and until closing of the transaction, and will take over all decommissioning obligations currently amounting to $2.9bn. The short-term debt will be repaid to APMM at or shortly after closing of the transaction and the proceeds will be used by APMM to reduce debt. Subject to meeting its investment grade objective, APMM plans to return a material portion of the value of the received Total shares to the APMM shareholders during the course of 2018/ 19 in the form of extraordinary dividend, share buyback, and/ or distribution of Total shares. Calculated as of 30 June 2017, the transaction gain after tax for APMM amounts to $2.8bn. The accounting gain will be recorded partly from earnings until closing and the residual at closing.