Transocean says Icahn acquired 1.6% of shares, seeks more

Transocean Ltd. (RIG), the world’s largest offshore rig contractor, said billionaire investor Carl Icahn and his affiliates have acquired a 1.56 percent stake in the company and are seeking to expand that to more than 3 percent.

Transocean said Icahn notified the company that he’s seeking regulatory approval to potentially acquire shares worth more than $682.1 million, according to a statement yesterday on its website. The move came 10 days after Transocean said it agreed to pay $1.4 billion in penalties for its role in the worst U.S. maritime oil spill in the Gulf of Mexico in 2010. Transocean shares lost more than half their value in the months following the spill and remain 41 percent below their pre-spill price.

“The timing definitely does not seem coincidental,” Trey Stolz, an analyst at Iberia Capital in New Orleans, said yesterday in a telephone interview. He rates the shares at overweight, which means investors should buy the stock, and owns none.

Icahn is known for buying stakes in companies he considers to be underperforming and then pushing for change. Last year he acquired large stakes and drove for new board members at energy companies Chesapeake Energy Corp. (CHK), an Oklahoma City-based natural gas producer, and CVR Energy Inc. (CVI), a Sugar Land, Texas- based oil refiner.

Undervalued Shares

The decline in shares following the April 2010 blowout have left Transocean undervalued and “highly attractive” at current prices, James West, an analyst at Barclays Capital, said Jan. 3 in a note to clients. The stock was trading at the time of his note at about 75 percent of the company’s net-asset value, compared with the 10-year average of 115 percent for the industry group, he said.

Icahn’s planned additional purchase of Transocean shares would amount to at least 3.4 percent of the company based on the Jan. 11 closing share price of $54.09, and would make Icahn one of the top two shareholders.

Capital Group Companies Inc. is the largest shareholder with a 4.92 percent stake worth $995.7 million and Franklin Resources (BEN) is second with $524.6 million of shares, according to data compiled by Bloomberg.

While the amount Icahn is trying to acquire is more than the $682.1 million threshold established under the Hart-Scott- Rodino Antitrust Improvements Act, it’s less than 25 percent of outstanding shares, the Vernier, Switzerland-based company said in its statement.

Guilty Plea

Brian Maddox, at FTI Consulting (FCN), speaking on behalf of Transocean, declined to comment further. Messages left after hours at Icahn’s office were not immediately returned.

Transocean, which has 30 buy ratings from analysts, 14 holds and 2 sells, has climbed 21 percent so far this year. The shares rose 0.2 percent to $54.09 on Jan. 11.

Earlier this month, the company agreed to plead guilty to one misdemeanor count of violating the Clean Water Act as owner of the Deepwater Horizon rig that drilled BP Plc (BP/)’s ill-fated Macondo well off the Louisiana coast in 2010, according to a filing in federal court in New Orleans.

Transocean will pay a $400 million criminal fine and $1 billion in civil penalties plus interest for the explosion that killed 11 workers, destroyed the Macondo well and spewed millions of barrels of crude into the Gulf of Mexico.

Transocean shares surged the most in 28 months after the settlement was announced Jan. 3, and yields on company debt fell, signaling rising investor demand.

Since the disaster, the company has continued to dominate the Gulf of Mexico’s deep-water drilling market. Fourteen of the 37 rigs actively drilling in Gulf water depths of at least 1,000 feet (305 meters) are owned by Transocean, more than any other operator, according to Dice Holdings Inc. (DHX)’s Rigzone, which tracks global offshore rig data.