UK offshore driller Ensco is set to acquire its U.S. rival Atwood Oceanics, expanding its fleet with high end rigs, and becoming the world’s largest jack-up operator.
The two companies have entered into a definitive merger agreement under which Ensco will acquire Atwood in an all-stock transaction. The definitive merger agreement was unanimously approved by each company’s board of directors.
Under the agreed merger, Atwood shareholders will receive 1.60 shares of Ensco for each share of Atwood common stock for a total value of $10.72 per Atwood share based on Ensco’s closing share price of $6.70 on 26 May 2017. This represents a premium of approximately 33% to Atwood’s closing price on the same date.
Upon close of the transaction, Ensco and Atwood shareholders will own approximately 69% and 31%, respectively, of the outstanding shares of Ensco plc.
As for the fleet, once the transaction has been completed, Ensco’s fleet will be expanded by six ultra-deepwater floaters, and five high-specification jack-ups.
The combined company will have a fleet of 63 rigs, comprised of ultra-deepwater drillships, deep- and mid-water semi-submersibles and shallow-water jack-ups.
The expanded fleet will have 37 jack-up rigs, including 27 premium units, which Ensco says will make it the largest jack-up operator in the world.
Ensco Chief Executive Officer Carl Trowell said, “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 said the acquisition significantly enhanced the company’s high-specification floater and jack-up fleets, adding technologically advanced drillships and semi-submersibles, and refreshing “our premium jack-up fleet to best position ourselves for the market recovery.”
The estimated enterprise value of the combined company is $6.9 billion, based on the closing price of each company’s shares on 26 May 2017. For comparison, Transocean, the world’s largest offshore driller, has an enterprise value of around $9 billion, according to data provided by Ycharts.
The merger transaction, subject to shareholders’ approvals of both companies, is expected to close in the third quarter 2017. The combined company will have approximately $3.7 billion in revenue backlog.
An interesting fact: Almost exactly six years ago, on May 31, 2011, Ensco completed acquisition of Pride, making it the world’s second largest offshore drilling company at the time.
Providing a comment on the merger news, Rystad Energy’s Senior Offshore Rig Analyst Liz Tysall said, “Consolidation has been long overdue and the Ensco-Atwood merger is the first step towards a less fragmented industry” says at Rystad Energy. “The combined fleet will have 63 rigs – 26 floaters and 37 jackups giving Ensco the largest blended fleet as compared to other offshore drilling contractors with fleets including both floaters and jackups.”
Offshore Energy Today Staff