Denmark’s Maersk Drilling and U.S. rival Noble Corp. will merge in a $3.4 billion deal to form one of the world’s largest offshore oil drilling rig companies, they said on Nov. 10.

The combined company is expected to reap annual cost savings of $125 million and it will take Noble Corp.’s name and be headquartered in Houston, with ownership split roughly 50:50 between the two companies' existing shareholders.

“The combination of Noble and Maersk Drilling will create a leading offshore driller with global scale, a strong balance sheet and significant free cash flow generation potential,” Noble board chair Chuck Sledge said in a statement.

The transaction is backed by a majority of shareholders at both companies and the new entity’s shares will be listed in both New York and Copenhagen, a joint statement said.

Noble chief exec Robert Eifler will become CEO of the merged business.

The company will maintain a significant operating presence in Stavanger, Norway, to retain proximity to customers and support operations in the Norwegian and broader North Sea regions.

The merger will lead to job losses to help deliver cost cuts, the companies said without specifying numbers.

“In the short term the combination will, unfortunately, impact our organization, but it will also create a larger and stronger company, which will provide future opportunities for growth and new jobs,” said Maersk Drilling CEO Jorn Madsen.

The deal was “primarily” an all-shares transaction, though Maersk Drilling shareholders will have the ability to elect to receive cash instead of shares for up to $1,000 each, subject to an aggregate cap of $50 million.

A Maersk spokesperson said the company had estimated the combined market capitalization of the two companies at approximately $3.4 billion.

“The combined company will hold an industry leading balance sheet, significant cost synergies, a modern fleet and with access to an international shareholder base,” said Robert Uggla, CEO of A.P. Moller Holding, Maersk Drilling’s biggest shareholder.

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