SINGAPORE (March 20): UOB KayHian is advising potential investors of Keppel Corp to “hold” and enter the O&M stock at $6.10 with an exit price of $6.45 in mind.
This comes on the back of news that Borr Drilling is seeking to acquire Transocean’s jackup fleet for US$1.2 billion ($1.7 billion).
However, UOB says the impact on Keppel will be "highly subject to outcome of negotiations".
To recap, Transocean entire rig fleet consists of 10 high-specification jackups, plus five newbuild jackups under construction at KeppelFELS.
Industry sources quoted by Upstream value the transaction at US$1.2 billion.
UOB further notes that Borr Drilling had on March 15 requested a special general meeting to increase its share capital from 122.5 million to 322.5 million shares which should raise the funds needed based on Borr Drilling’s last traded price of NOK32/share.
Oslo-based Borr Drilling is bankrolled by Tor Olav Troim, the former right-hand man of shipping and offshore billionaire John Fredriksen.
Borr recently purchased a pair of KFELS jackups from bankrupt Hercules Offshore for US$130 million.
UOB has estimated a valuation of US$492 million for Transocean’s existing rig fleet.
“The difference between our estimate and the US$1.2 billion implies a valuation of US$708 million for the newbuilds, translating into US$142 million per rig.
Shares of Keppel are trading 4 cents lower at $6.83.
