France’s Total S.A. (NYSE:TOT) said earlier today it had struck a deal to acquire A.P. Moller Maersk’s oil and gas business for $7.45 billion. The transaction will comprise $4.95 billion to be paid in the form of Total shares, with the company also taking on debt worth $2.5 billion.
The deal comes as the Danish shipping giant was exploring exit options for its energy business which has struggled amid a continued slump in oil prices. Possible options included floating the company through an initial public offering. For Total, which is Europe’s second largest energy player, the buyout represents Total’s renewed focus on assets in the North Sea amid cheaper valuations to keep with competition. The rout in oil prices has now created attractive opportunities for oil major to seek acquisitions to shoring up exploratory reserves and production.
Last month, Total indicated in a call conference that it was ready to make strategic acquisitions as it paves way for expansion. The deal is one of the largest in the energy space in recent months as appetite for investment remains cautious with analysts signaling continued pressure on prices.
The deal is likely to close in the first quarter of 2018, but must first clear regulatory approval from several authorities. Shares of Total SA were flat in New York today, while A/P Moller Maersk shares advanced as much 5% in Copenhagen.