For U.S. federal income tax purposes, a U.S. holder of Pride common stock should recognize gain or loss on the receipt of American Depositary Shares (ADSs) and cash in exchange for Pride common stock equal to the difference, if any, between (1) the sum of the fair market value of the ADSs and cash received in the merger, including any cash received in lieu of fractional ADSs, and (2) such U.S. holder’s adjusted tax basis in the Pride common stock exchanged therefor. Please note that you should consider prior stock splits in the calculation of your adjusted tax basis, if applicable.
The fair market value of the ADSs issued in the merger will be reported as $53.32 based on the closing price of the ADSs on the effective date of the merger, 31 May 2011. The holding period for any ADSs received in the merger will begin on 1 June 2011, the day after the effective date of the merger. Based on the fair market value that will be reported, a U.S. holder’s new cost basis for ADSs received in the merger will be $53.32 determined by the closing price of the ADSs on the effective date of the merger, 31 May 2011. Ensco encourages shareholders to consult a qualified tax advisor. Ensco is not able to provide tax advice to shareholders.