Earlier this week, both Ensco and Atwood Oceanics’ board of directors unanimously approved the definitive merger of the two companies. After the acquisition of Atwood, Ensco will have a total value of $6.9 billion. The terms of the merger agreement states that Atwood shareholders will receive 1.60 shares of Ensco for each share of Atwood common stock, totaling a value of $10.72 per Atwood share.
The all-stock transaction has a total value of roughly $839 million. Ensco shareholders will own approximately 69% stake in the combined company after the merger.
Atwood Oceanics operates one of the “most technologically advanced drilling fleets in the world.” The offshore drilling company has been a Houston staple for more than 45 years. Ensco is an offshore drilling company headquartered in London with corporate offices in Houston. In business for nearly 30 years, Ensco operates the world’s second largest offshore fleet.
In a press release, Atwood’s CEO Rob Saltiel stated. “The combination is an ideal strategic fit… We believe the combined company will offer an unmatched rig fleet and workforce.” With the merger, Ensco adds six ultra-deepwater floaters that come with four highly capable drillships and five high-specification jackups. The merged fleet will be comprised of ultra-deepwater drillships, versatile deep and mid-water semisubmersibles, and shallow-water jackups.
The combined fleet will now be comprised of 63 total rigs. The merger also creates a large and diverse customer base that includes 27 national oil companies, supermajors and independents. The rig fleet will fill drilling contracts that span the globe and will include the largest number of current customers of any offshore driller.
In a press release, Ensco CEO and President Carl Trowell added, “The combination of Ensco and Atwood will strengthen our position as the leader in offshore drilling across a wide range of water depths around the world – creating a broad platform that we can build upon in the future.” Trowell also goes on to say that the merger creates a fleet that puts the company in the best positon for the market recovery.
The merger also will save an estimated $65 million in cost synergies per year for the year 2019 and beyond with a projected cost synergy of $45 million for next year. There will be a consolidation of some corporate offices and shore-based operations in overlapping markets.
The executive management of Ensco will stay the same with Carl Trowell as President and CEO, Carey Lowe as Executive Vice President and COO, and John Baksht as Senior Vice President and CFO.
Paul Rowsey will continue on as the Chairman of the Board, and Ensco’s board of directors will include two of Atwood’s current board members along with Carl Trowell. Ensco’s headquarters will remain in London with senior executive officers based there and in Houston.
The merger will not be finalized until both company’s shareholders approve the transaction. Both companies will soon file a joint proxy statement/prospectus with the SEC, and the merger deal could be closed as soon as the third quarter of 2017.
Article written by HEI contributor Raymond Arrasmith.