The offshore driller Ensco plc agreed to acquire rival Atwood Oceanics Inc. in an all-stock transaction to form a combined company with an estimated enterprise value of $6.9 billion.
Atwood shareholders would receive 1.6 shares of Ensco for each Atwood share they hold, a value equivalent to $10.72 per Atwood share based on Ensco's closing share price of $6.70 as of May 26, according to a May 30 news release. The value represents a 33% premium on Atwood's closing price on the same date and amounts to about $863 million based on the May 26 price.
At closing, which is scheduled for the third quarter, Ensco shareholders would own 69% of Ensco's outstanding shares, while Atwood shareholders would own 31% of the shares.
The merger between the two offshore drillers is a "strategic fit," with the combined company having a fleet composed of 63 rigs, with exposure to deep- and shallow-water markets across six continents, and a customer base of 27 national, international and independent oil companies, Ensco and Atwood executives said in the release. The deal would add six ultra-deepwater floaters and five high-specification jackups to the combined company's offshore drilling fleet.
Ensco would retain its management team, with Carl Trowell as president and CEO, Carey Lowe as executive vice president and COO, and Jon Baksht as senior vice president and CFO. Paul Rowsey would remain the company's chairman.
Atwood shares were up 25% in late morning trading May 30, at $10.09. Ensco was down 4.3% at the same time, to $6.41.