09:29, August 21 202 0

2017-08-21 09:29:08
Freshfields and Davis Polk lead on $7bn Total deal

Freshfields Bruckhaus Deringer and Davis Polk & Wardwell have been drafted in to advise Total on the $7.45 bn (£5.7bn) acquisition of Maersk Oil.

The Freshfields team was led by Paris partner Hervé Pisani and oil and gas co-head Graham Watson. Simon Milthers and Martin Allan Christensen led the team from Danish law firm Bech-Bruun, which advised on the local law aspects of the deal.

Davis Polk corporate partner Will Pearce led the team for Maersk Oil, while Gorrissen Federspiel Advokatpartnerselskab partners Klaus Søgaard and Charlotte Thorsen on the local law aspects of the deal.

This is the largest North Sea takeover deal in a decade. Total expects to generate operational, commercial and financial synergies of more than $400m per year thanks to a boost in North Sea activity.

Total CEO and chairman Patrick Pouyanne said: “The combination of Maersk Oil’s North Western Europe businesses with our existing portfolio will position Total as the second operator in the North Sea with strong production profiles in UK, Norway and Denmark, thus increasing exposure to conventional assets in OECD countries.”

As part of the deal, Maersk Oil will receive 97.5m Total shares, valued at $4.95m. This would equate to 3.75 per cent of Total’s share capital. Total will also assume $2.5 m of Maersk Oil’s debt. A seat on Total’s board of directors may also be offered to Maersk’s main shareholder, A.P. Møller Holding.

The deal is expected to close in the first quarter of 2018.

Freshfields global oil & gas group co-head Watson said: “We are delighted to support long-standing client Total with our sector expertise for complex, multi-jurisdictional portfolio deals and high-end French M&A capability.”

In Maersk’s latest financial results earlier this year, CEO Søren Skou said that the company was “again profitable”, with revenue growing by $1bn year on year in the second quarter of 2017. Profits were $490m higher than the same quarter last year, based on higher rates.

“Focus for the oil and gas related businesses in our Energy division remain on optimising performance and exploring new business models to strengthen resilience under the current market conditions,” Skou said at the time.

In the last week of the quarter the company was hit by a cyber-attack, which mainly impacted Maersk Line, APM Terminals and Damco. Business volumes were negatively affected for a couple of weeks in July and as a consequence, the company’s Q3 results is estimated be hit by losses of $200-300m.