Transocean  (RIG - Get Report) said Monday it's agreed to buy all of the outstanding units of offshore rig affiliate Transocean Partners (RIGP) for $250 million stock, which will simplify its cost structure and bring in more cash.

Transocean Partners stockholders will receive 1.1427 Transocean shares for each of their units, which implies a 15% over the units' closing price Friday. Transocean expects to issue 22.7 million shares in the deal.

The transaction has to be cleared by Transocean Partners unitholders but is expected to close in the fourth quarter. Transocean has already committed to voting its 21.3 million units in favor of the deal, leaving 9.9 million, or about 50.1% of the 19.7 million units not held by Transocean, required to close the deal.

The merger isn't expected to be taxable to Transocean Partners' unitholders. Its minimum quarterly distribution of 36.25 cents per unit for the third quarter is expected to be paid in the fourth quarter.

Transocean will end up with Transocean Partners' 51% ownership interests in the Discoverer Inspiration, the Discoverer Clear Leader and theDevelopment Driller III.

Transocean CEO and president Jeremy Thigpen said in a statement that the deal provides significant and immediate benefits to Transocean, including simplified administration and governance, tangible cost savings and improved liquidity. "The contemplated all-equity transaction is entirely consistent with Transocean`s current liquidity objectives," he said.

Transocean Partners CEO and CFO Kathleen McAllister said unitholders will benefit from a premium to the current unit price and receive shares in an entity with significant financial flexibility, a demonstrated access to capital and meaningfully improved market liquidity of its shares. "We expect that common unitholders will also benefit from Transocean's significantly larger and more diverse fleet and its industry-leading contract backlog," he said.

Analysts at Tudor, Pickering, Holt & Co. said the deal wasn't a "game changer," but a "nice" step in the right direction, simplifying Transocean's cost structure in a non-cash deal that adds cash flow. "We always struggled to see benefit of offshore rigs housed in an MLP (yield vehicle) given offshore pricing/contracting outlook," they said.

Seaport Global Securities agreed, saying the transaction will help Transocean remove an overhang associated with the master limited partnership that can no longer serve its intended purpose. "We believe it is prudent for RIG to fold the assets fully back into its fleet before the steep loss in cash flow impacts the small MLP structure, given the impending expiration of the contracts on the three rigs," analyst Mark Brown said. "The issuance of equity in order to do so circumvents impacting its liquidity."

TPH said the enterprise value of the deal is $1.6 billion, including the non-controlling interest, or $530 million with the deal premium.

Barclays Capital Inc.'s Andrew Steinau, John Blake, Gary Posternack, Jeff Maddox, Christopher Hefty and Danielle Eveslage advised Transocean's board while Evercore's David Andrews, Ray Strong, Eric Bauer, Mark Crandall and Alex Jeffries assisted the conflicts committee of Transocean Partners' board.

Baker Botts LLP counseled Transocean with a team that included Gene Oshman, A.J. Ericksen, James Mayor, Jonathan Bobinger, Nathan Tanner, Derek Green, Jon Lobb, Gail Stewart and Chris Pratt. Richards, Layton & Finger PA's Srinivas Raju, Ken Jackman and Mark Purpura counseled the conflicts committee of Transocean Partners' board.