Under the terms, Rowan shareholders will receive 2.215 Ensco shares for each of their Rowan shares. The deal would offer Rowan shareholders roughly no premium based on Friday’s closing price of $18.78. Ensco stockholders will own 60.5% of the combined company, with Rowan shareholders owning the remaining.
Ensco stock shot up 2% to $8.65, while Rowan stock was up 1% to $18.98.
The merger will create a leading offshore driller by fleet size, geographic presence and customer base, with 28 floating rigs and 54 jack-ups with drilling operations in the Gulf of Mexico, Brazil and West Africa, among others.
“The combination of Ensco and Rowan will create an industry leader in offshore drilling across all water depths,” Ensco CEO Carl Trowell, who will serve as executive chairman of the combined company, said in a statement.
“Through this combination, Ensco shareholders will uniquely benefit from Rowan’s strategic joint venture with Saudi Aramco, ARO Drilling, while all stakeholders will share in meaningful cost savings and even greater upside to improving market conditions as the industry recovery continues gaining momentum,” he added.
The merged firm expects to save around $150 million in pre-tax expenses.
Rowan’s current CEO, Tom Burke, will serve in that role at the combined company, which will be based in the UK.
“By merging our high-quality rig fleets and infrastructure covering the world’s most prolific offshore basins, we increase our scale while maintaining a shared focus on high-specification assets that will include ultra-deepwater drillships and versatile semisubmersibles, as well as harsh environment and modern jack-ups,” said Burke.
The deal is expected to close in the first half of next year.
Contact Uttara Choudhury at [email protected]