Creates World’s Second Largest Offshore Driller
Expand Into Strategic, High-Growth Markets
Wider Range of Enhanced Drilling Technologies
Substantial Presence in Deepwater Drilling Sector
Complementary Fleet Composition, Geographic Scope and Customer Base
Combined Estimated Revenue Backlog of $10 Billion
At Least $50 Million of Annual Expense Synergies from Combination
Immediately Accretive to Ensco’s Earnings and Cash Flow
Ensco Will Continue Quarterly Cash Dividend of $0.35 Per Share
LONDON & HOUSTON--(BUSINESS WIRE)--
Ensco plc (NYSE: ESV) and Pride International, Inc. (NYSE: PDE) jointly
announced today that they have entered into a definitive merger
agreement under which Ensco will combine with Pride in a cash and stock
transaction valued at $41.60 per share based on Ensco’s closing share
price on 4 February 2011. The implied offer price represents a premium
of 21% to Pride’s closing share price as of the same date and a premium
of 25% to the one month volume weighted average closing price of Pride.
The definitive merger agreement was unanimously approved by each
company’s board of directors.
Under the terms of the merger agreement, Pride stockholders will receive
0.4778 newly-issued shares of Ensco plus $15.60 in cash for each share
of Pride common stock. Upon closing, and reflecting the issuance of new
Ensco shares, Pride stockholders collectively will own approximately 38%
of Ensco’s outstanding shares.
Ensco expects the combined company to realize annual pre-tax expense
synergies of at least $50 million for full year 2012 and beyond. The
combination is projected by Ensco management to be immediately accretive
to Ensco’s earnings and cash flow per share before synergies.
The transaction will create the second largest offshore driller in the
world with 74 rigs spanning all of the strategic, high-growth markets
around the globe. The combined company will have 21 ultra-deepwater and
deepwater rigs, forming the second largest/youngest fleet able to drill
in water depths of 4,500’ or greater. In addition, the combined company
will have more active jackup rigs than any other driller. Mid-water rigs
will represent 8% of the combined fleet.
Based on the closing price of each company’s shares on 4 February 2011,
the estimated enterprise value of the combined company is $16 billion.
The total estimated revenue backlog for the combined company is
approximately $10 billion.
Strategic Fit
Ensco plc’s Chairman, President and Chief Executive Officer Dan Rabun
stated, “The combination is an ideal strategic fit, as our rig types,
markets, customers and expertise complement each other with minimal
overlap. Pride has gained valuable expertise building and operating
ultra-deepwater semisubmersibles and drillships and has strong
relationships with leading customers in Brazil and West Africa, two of
the fastest-growing deepwater markets in the world. Ensco is a leading
provider of premium jackups and ultra-deepwater semisubmersible rigs
with a major presence in the North Sea, Southeast Asia, North America
and the Middle East. Together, we will form an even stronger company
that is ideally positioned to capitalize on growth opportunities within
our industry.”
Mr. Rabun added, “We share the same core values through our dedication
to safety, ethics, operational excellence, employee development,
customer satisfaction and disciplined risk management. These values form
the foundation of our future growth.”
Pride International’s President and Chief Executive Officer Louis
Raspino added, “The combination of Pride and Ensco creates an offshore
contract driller with many of the attributes needed to ensure long-term
success in our business. I have always been an advocate of scale,
believing that a company with critical mass is afforded numerous
benefits, including operational efficiencies, marketing advantages and
the ability to attract and retain talented individuals that will help to
secure a strong future for our company.
“The diverse composition of the fleet, with significant exposure to
high-specification capabilities in both the floating and jackup rig
segments, a solid and conservative approach to managing through the
complexities of our business, aided by one of the industry’s strongest
balance sheets and proven leadership that has demonstrated consistent
execution and commitment to growth, makes the combination of Pride
International and Ensco plc a premier alternative for investors and the
driller of choice for our clients.
“Pride stockholders will receive newly-issued Ensco shares that provide
them an ongoing interest in a world-class offshore driller with
significant growth potential, as well as a cash component, that
combined, represents a substantial premium for Pride’s shareholders.”
Combined Company Highlights
The merger will combine two of the offshore drilling industry’s premier
companies, combining long and established histories of operational,
engineering and technical expertise along with quality assets and
infrastructure in a number of the world’s prolific offshore drilling
basins.
The combined company’s fleet will be among the most technologically
advanced in the industry and meet the deep- and shallow-water drilling
requirements of an expanded base of clients around the world. Within the
fleet of 27 floating rigs (semisubmersibles and drillships) are 21
deepwater drilling rigs, including seven rigs delivered since 2008 and
another five rigs expected to be delivered between now and 2013,
establishing this fleet as among the youngest and most capable in the
industry. Thirteen of the rigs are rated for operations in water depths
of 7,500 feet and greater.
Also, the combined company’s jackup rig fleet, composed of 47 rigs, all
with independent leg design, includes 27 units with water depth ratings
of 300 feet and greater, with nine units delivered since 2000 and
equipped with many of the advanced features requested by clients with
shallow water drilling programs, such as increased leg length, expanded
cantilever reach and greater hoisting capacity.
The combined company will be among the most geographically diverse
drillers with current operations and drilling contracts spanning more
than 25 different countries on six continents in nearly every major
deep- and shallow-water basin around the world. Regions will include
major markets in Southeast Asia, the North Sea, Mediterranean, U.S. Gulf
of Mexico, Mexico, Middle East and Australia, as well as the
fastest-growing deepwater markets, Brazil and West Africa, where Pride
has operated continuously for over 15 years and where some of the
world’s most prolific geology resides.
Customers will include most of the leading national and international
oil companies, plus many independent operators. In total, the combined
company will have the second largest number of current customers of any
offshore driller and will benefit from enhanced diversification given
the minimal overlap between the two companies.
Dan Rabun will remain Chairman, President and CEO and James W. Swent
will continue as Senior Vice President and CFO. The remaining executive
management team for the combined company will be named at a later date
and is expected to be composed of executives from both Ensco and Pride.
Ensco’s eight board members will continue to serve as directors of the
combined company and two Pride directors will be appointed to an
expanded board effective at closing.
The combined company, which will retain the name Ensco plc, will remain
domiciled in the UK. Virtually all of the senior executive officers will
be located in London. The combined company is anticipated to realize
significant benefits similar to those already achieved by Ensco since
its redomestication to the UK in 2009. These benefits include greater
access to major customers, enhanced oversight of global operations due
to improved time zone overlap, increased access to European
institutional investors and a more competitive tax position.
Ensco plc American Depositary Shares (ADS) will continue to trade on the
New York Stock Exchange under the symbol “ESV”.
Transaction Details
Pride shareholders will receive 0.4778 newly-issued Ensco shares plus
$15.60 in cash for each Pride common share. The offer results in an
implied offer price per diluted share of $41.60 based on Ensco’s closing
price of $54.41 on 4 February 2011. The offer represents a premium of
approximately 21% to Pride’s closing price of $34.39 on 4 February 2011
and a premium of 25% to the one-month volume weighted average closing
price of Pride.
Upon closing, Ensco and Pride shareholders will own an estimated 62% and
38%, respectively, of the combined company. The total number of Ensco
diluted shares outstanding upon closing will be approximately 229
million.
Financial Highlights
Future revenue growth is anticipated as new opportunities are identified
within the expanded customer base. As customers continue to invest in
many of the largest and fastest-growing offshore basins, such as Brazil
and numerous other emerging locations, new discoveries and development
projects are expected to generate substantial additional demand for
offshore drilling.
Annual expense savings of at least $50 million are estimated to be
realized in full year 2012 and beyond. Expense savings are anticipated
from the consolidation of offices that include corporate staff
departments, as well as the standardization of systems, policies and
procedures across the combined organization.
Ensco management anticipates that the planned combination will be
accretive to earnings per share in 2011 and 2012. Excluding
transaction-related costs and costs incurred to achieve ongoing expense
synergy benefits, earnings per share for full year 2012 for the combined
company is projected to be more than 10% accretive to the First Call
earnings per share mean estimate of $5.11 for full year 2012 published
by Thomson Reuters as of 6 February 2011 for Ensco plc. The 2011
accretion outlook does not include expense synergy benefits. For 2012,
approximately $50 million of expense synergy benefits are included in
the accretion estimate. The Company anticipates providing an initial
full-year 2011 outlook for Ensco on a stand-alone basis during its
fourth quarter 2010 earnings conference call scheduled for 24 February
2011.
The transaction will be financed through a combination of existing cash
on the balance sheet and newly-issued Ensco shares and debt. Total cash
paid to Pride shareholders will be approximately $2.8 billion. Ensco has
received commitments from Deutsche Bank AG Cayman Islands Branch and
Citibank N.A. to finance the incremental debt required for the
transaction. Given the number of rigs under construction, it is
contemplated that cash flows initially will be dedicated to finance
newbuild rigs; however, future cash flows also are expected to be used
to pay down debt.
The combined company is expected to have investment-grade ratings and
approximately $10 billion in revenue backlog that are expected to
support further strategic growth. Long-term debt as a percentage of
total capital is anticipated to be approximately 30% following the
closing, which is comparable to other investment-grade offshore
drillers. The combined company’s credit profile will benefit from
increased scale and significantly enhanced diversification across
markets, rig types, customers and expertise due to the complementary
makeup of the respective businesses.
In connection with the proposed Pride combination, Ensco’s board of
directors intends to maintain the $0.35 per share quarterly cash
dividend ($1.40 per share annualized) following the closing of the
transaction.
Conditions and Timing
The transaction is subject to approval by the shareholders of Ensco and
Pride, as well as other customary closing conditions. The transaction is
not subject to any financing condition. Ensco and Pride intend to file a
joint proxy statement/prospectus with the Securities and Exchange
Commission as soon as possible. The companies anticipate that the
transaction could close as soon as the second quarter of 2011.
Advisors
Ensco’s lead financial advisor and strategic advisor for the transaction
is Deutsche Bank Securities Inc. and Citi also served as financial
advisor, and its legal advisor is Baker & McKenzie LLP. The financial
advisor for Pride is Goldman, Sachs & Co. and its legal advisors are
Baker Botts L.L.P. and Wachtell, Lipton, Rosen & Katz.
Conference Call/Webcast
Ensco and Pride will host an investor and analyst conference
call/webcast Monday, 7 February 2011 at 10:00 a.m. EST (9:00 a.m. CST
and 3:00 p.m. London time) to discuss the proposed combination. The
webcast may be accessed on the investor relations sections of the two
companies’ websites, www.enscoplc.com
and www.prideinternational.com.
You may also listen to the conference call by dialing (201) 689-8337. We
recommend that participants call five to ten minutes before the
scheduled start time. Shortly before the conference call begins, slides
will be posted under the investor relations sections of each company’s
website that will be referred to during the call.
A replay of the conference call will be available by phone for six days
after the call by dialing (201) 612-7415 (Account 334, Conference ID
366944). A transcript of the call and access to the replay may be found
within 36 hours at the investor relations sections of the two companies’
websites, www.enscoplc.com
and www.prideinternational.com.
ABOUT ENSCO
Ensco plc (NYSE: ESV) brings energy to the world as a global provider of
offshore drilling services to the petroleum industry. With a fleet of
ultra-deepwater semisubmersible and premium jackup drilling rigs, Ensco
serves customers with high-quality equipment, a well-trained workforce
and a strong record of safety and reliability. To learn more about
Ensco, please visit our website www.enscoplc.com.
ABOUT PRIDE
Pride International, Inc., headquartered in Houston, Texas, operates a
fleet of 26 mobile offshore drilling units, consisting primarily of
floating rigs (semisubmersibles and drillships) that address deepwater
drilling programs around the world. The company has one of the youngest
and most technologically advanced deepwater drilling fleets in the
offshore industry, with five drillships, including three delivered since
2010, six semisubmersible rigs and two managed deepwater rigs. Two
additional deepwater drillships are currently under construction with
expected deliveries in 2011 and 2013. The company’s fleet also includes
six other semisubmersible rigs and seven jackup rigs. Pride
International’s floating rig fleet operates primarily offshore Brazil
and West Africa where the company has a long-standing presence.
Forward-Looking Statements
Statements included in this document regarding the consummation of
the proposed transaction, benefits, expected synergies and other expense
savings and operational and administrative efficiencies, opportunities,
timing, expense and effects of the transaction, contemplated financing
of the transaction, financial performance, accretion to earnings,
revenue growth, future dividend levels, credit ratings or other
attributes of the combined companies and other statements that are not
historical facts, are forward-looking statements. Forward-looking
statements include words or phrases such as "anticipate," "believe,"
“contemplate,” "estimate," "expect," "intend," "plan," "project,"
"could," "may," "might," "should," "will" and words and phrases of
similar import. These statements involve risks and uncertainties
including, but not limited to, actions by regulatory authorities, rating
agencies or other third parties, actions by the respective companies’
security holders, costs and difficulties related to integration of
acquired businesses, delays, costs and difficulties related to the
transaction, market conditions, and the combined companies' financial
results and performance, consummation of financing, satisfaction of
closing conditions, ability to repay debt and timing thereof,
availability and terms of any financing and other factors detailed in
risk factors and elsewhere in each company’s Annual Report on Form 10-K
for the year ended December 31, 2009, and their respective other filings
with the Securities and Exchange Commission (the "SEC"), which are
available on the SEC’s website at www.sec.gov.
Should one or more of these risks or uncertainties materialize (or
the other consequences of such a development worsen), or should
underlying assumptions prove incorrect, actual outcomes may vary
materially from those forecasted or expected. All information in this
document is as of today. Except as required by law, both
companies disclaim any intention or obligation to update publicly or
revise such statements, whether as a result of new information, future
events or otherwise.
Important Additional Information Regarding The Transaction Will Be
Filed With The SEC
In connection with the proposed transaction, Ensco will file a
registration statement including a joint proxy statement/prospectus of
Ensco and Pride with the SEC. INVESTORS AND SECURITY HOLDERS OF ENSCO
AND PRIDE ARE ADVISED TO CAREFULLY READ THE REGISTRATION STATEMENT AND
PROXY STATEMENT/PROSPECTUS (INCLUDING ALL AMENDMENTS AND SUPPLEMENTS TO
IT) WHEN IT BECOMES AVAILABLE BECAUSE IT WILL CONTAIN IMPORTANT
INFORMATION ABOUT THE TRANSACTION, THE PARTIES TO THE TRANSACTION AND
THE RISKS ASSOCIATED WITH THE TRANSACTION. A definitive joint
proxy statement/prospectus will be sent to security holders of Ensco and
Pride seeking their approval of the proposed transaction. Investors and
security holders may obtain a free copy of the joint proxy
statement/prospectus (when available) and other relevant documents filed
by Ensco and Pride with the SEC from the SEC's website at www.sec.gov.
Security holders and other interested parties will also be able to
obtain, without charge, a copy of the joint proxy statement/prospectus
and other relevant documents (when available) by directing a request by
mail or telephone to either Investor Relations, Ensco plc, 500 N. Akard,
Suite 4300, Dallas, Texas 75201, telephone 214-397-3015, or Investor
Relations, Pride International, Inc., 5847 San Felipe, Suite 3300,
Houston, Texas 77057, telephone 713-789-1400. Copies of the documents
filed by Ensco with the SEC will be available free of charge on Ensco’s
website at www.enscoplc.com
under the tab “Investors.” Copies of the documents filed by Pride with
the SEC will be available free of charge on Pride’s website at www.prideinternational.com
under the tab “Investor Relations.” Security holders may also read and
copy any reports, statements and other information filed with the SEC at
the SEC public reference room at 100 F Street N.E., Room 1580,
Washington, D.C. 20549. Please call the SEC at (800) 732-0330 or visit
the SEC’s website for further information on its public reference room.
Ensco and Pride and their respective directors, executive officers and
certain other members of management may be deemed to be participants in
the solicitation of proxies from their respective security holders with
respect to the transaction. Information about these persons is set forth
in Ensco's proxy statement relating to its 2010 General Meeting of
Shareholders and Pride’s proxy statement relating to its 2010 Annual
Meeting of Stockholders, as filed with the SEC on 5 April 2010 and 1
April 2010, respectively, and subsequent statements of changes in
beneficial ownership on file with the SEC. Security holders and
investors may obtain additional information regarding the interests of
such persons, which may be different than those of the respective
companies' security holders generally, by reading the joint proxy
statement/prospectus and other relevant documents regarding the
transaction, which will be filed with the SEC.
Source: Ensco plc and Pride International, Inc.