Total S.A. Gets EU Nod for $7.5B Purchase of Maersk Oil

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By Eleanor Tyler

Total S.A. got European Competition Commission clearance Nov. 29 to close its $7.45 billion bid to buy the oil and gas unit of A.P. Moller-Maersk A/S, Total’s biggest acquisition in almost two decades.

Big deals among the largest oil companies have been rare since a steep drop in oil prices in 2014. The merger would leave Total the second largest offshore operator in the North Sea. The largest operator is the China National Offshore Oil Corp., accounting for about 11 percent of total output, according to data compiled in 2016 by the energy research firm Wood Mackenzie.

The transaction is expected to close in the first quarter of 2018. It’s still pending before the Danish Competition Council, which has a 97 percent approval rate, according to Bloomberg data.

The European Commission cleared the deal without reservations because the combined market shares of the two companies are modest in any given country.

“Total expects to generate operational, commercial, and financial synergies of more than $400 million per year, in particular by the combination of assets of Total and Maersk Oil in North Sea, an area of excellence for both companies,” Total said in announcing the deal.

According to Total, Maersk brings around 1 billion barrel oil equivalents (boe) of contingent and proven and probable reserves to Total in areas that help balance Total’s country risks. As part of that process, Total also announced on Nov. 28 that it is selling its interests in the Martin Linge field and Garantiana discovery on the Norwegian Continental Shelf to Statoil, Norway’s state-owned energy company. Total will get $1.45 billion for those assets.

Total is also shedding its fuel marketing activities in Italy, the third divestment action it’s taken recently there to exit a joint venture, for a total amount of around 750 million euros ($888.7 million).

Total announced the Maersk deal in August. Total will pay Moller-Maersk $4.95 billion in Total shares and assume $2.5 billion of Maersk Oil’s debt. Total CEO Patrick Pouyanne said the deal “is immediately accretive to both cash flow and earnings per share and delivers further growth over coming years.”

To contact the reporter on this story: Eleanor Tyler in Washington at etyler@bloomberglaw.com

To contact the editor responsible for this story: Fawn Johnson at fjohnson@bloomberglaw.com

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