BORR - Noble Corporation: U.K. Antitrust Watchdog Likely To Require Jackup Rig Divestitures

• Noble and Maersk Drilling reveal the likely requirement to divest a material part of the combined company's jackup fleet to obtain UK antitrust clearance.
• Divestment would have a material impact on the new Noble Corporation's earnings power. Particularly the potential loss of the world's largest modern jackup rig "Noble Lloyd Noble" would be disappointing.
• Discussing potential remedies with a spin-off of the affected rigs is the most likely outcome at this point.
• Despite the setback, both Noble and Maersk Drilling remain committed to the merger at this point. Should the companies obtain UK antitrust clearance, the transaction is expected to close within the next couple of months.
• Regardless of the ultimate outcome, I reiterate my "buy" recommendation on Noble as the company remains cheap relative to peers and appears well on the way to substantial near-term cash flow generation.

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