On Monday, Noble Corporation (NYSE:NE) maintained its Buy rating and a price target of $63.00, following the announcement of its acquisition of another company. The deal, valued at approximately $2 billion, will see Noble Corporation issuing new shares worth $1.04 billion and paying almost $600 million in cash to the shareholders of the acquired company. This payment represents an 11.4% premium to the closing share price on Friday.
The strategic move will add four high-specification drillships and one high-specification semi-submersible to Noble's existing fleet, in addition to six other semi-submersibles, of which four are active and two are idle. Noble Corporation anticipates the transaction to be completed by the first quarter of 2025 and projects pre-tax synergies of $100 million, with 75% expected to be realized in the first year.
To finance the acquisition, Noble will increase its debt, but leverage is projected to remain modest at approximately 1x, with an expected decrease as cash flow increases. The company also forecasts a significant increase in EBITDA per share by 2026, projecting robust mid-teen accretion even after accounting for the additional interest from the new debt.
In light of the enhanced cash return potential from the combined fleet, Noble Corporation has declared a 25% increase in its quarterly dividend, which will rise to 50 cents starting in the third quarter of 2024.
InvestingPro Insights
As Noble Corporation (NYSE:NE) embarks on a strategic acquisition to bolster its fleet, real-time data from InvestingPro provides a snapshot of the company's financial health and market performance. With a market capitalization of $6.09 billion and a P/E ratio of 13.15, which adjusts to a lower 11.76 when considering the last twelve months as of Q1 2024, Noble Corporation is trading at a valuation that suggests room for growth relative to its earnings potential. Additionally, a PEG ratio of 0.61 indicates that the company's earnings growth may be undervalued.
InvestingPro Tips highlight that Noble Corporation is expected to be profitable this year, with analysts predicting an uptick in earnings. The company's stock is known for low price volatility, which could appeal to investors seeking stability. Moreover, Noble's liquid assets surpass its short-term obligations, indicating a solid liquidity position that could support its recent acquisition. With a moderate level of debt and a projected leverage of approximately 1x post-acquisition, the company maintains a balanced financial structure.
For investors looking to delve deeper into Noble Corporation's financials and future outlook, there are additional InvestingPro Tips available. By using the coupon code PRONEWS24, readers can get an extra 10% off a yearly or biyearly Pro and Pro+ subscription to access these insights.
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