Broad Portfolio of High-Specification Floaters and Jack-ups
Diverse
Customer Base Includes Most of the Largest Holders of Offshore Reserves
Broadest
Geographic Presence of Any Offshore Driller
Well Capitalized with
Combined Liquidity of $3.9 Billion
$150 Million of Anticipated
Annual Expense Synergies
Accretive to Cash Flow Per Share in First
Full Year Following Closing
Clear Leader in Customer Satisfaction
with Strong Focus on Safety and Operations
LONDON--(BUSINESS WIRE)--
Ensco plc (NYSE: ESV) and Rowan Companies plc (NYSE: RDC) jointly
announced today that the companies have entered into a definitive
transaction agreement under which Rowan will combine with Ensco in an
all-stock transaction. The definitive transaction agreement was
unanimously approved by each company’s board of directors. The Saudi
Aramco partner to the ARO Drilling joint venture has consented to the
combination between Rowan and Ensco.
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Under the terms of the transaction agreement, Rowan shareholders will
receive 2.215 Ensco shares for each Rowan share. Upon closing, Ensco and
Rowan shareholders will own approximately 60.5% and 39.5%, respectively,
of the outstanding shares of the combined entity. There are no financing
conditions for this transaction.
The combined company expects to realize annual pre-tax expense synergies
of approximately $150 million, with more than 75% of targeted synergies
expected to be realized within one year of closing. As a result, the
transaction is projected to be accretive to cash flow per share in 2020
following an anticipated closing in the first half of 2019.
Rowan President and Chief Executive Officer Tom Burke, who will serve as
President and Chief Executive Officer of the combined company, said, “We
are excited to reach an agreement to combine our well-respected
organizations, enabling both Rowan and Ensco shareholders to participate
in the substantial value creation opportunities of a larger, more
technologically-advanced and diverse offshore drilling company. 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. Rowan shareholders also
benefit from the addition of significant backlog and substantial scale
in ultra-deepwater operations. The combined entity’s talented workforce,
unrivaled geographic and customer diversification, and solid financial
position ideally position us to meet increasing customer demand for the
most technologically-advanced drilling rigs as the offshore sector
recovers.”
Ensco President and Chief Executive Officer Carl Trowell, who will serve
as Executive Chairman of the combined company, stated, “The combination
of Ensco and Rowan will create an industry leader in offshore drilling
across all water depths, with significant advantages to capitalize on
future opportunities and better serve our customers. Ensco and Rowan
share a common culture built around safety and operational excellence,
innovation, technical expertise and customer satisfaction. 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.”
Combined Company Highlights and Strategic Fit
Creating a leading offshore rig fleet, with many of the industry’s
highest specification assets
-
The combination will bring together both companies’ complementary
businesses, creating a leading offshore driller by fleet size,
geographic presence and customer base, with 82 rigs1
spanning six continents and collectively serving more than 35
customers, including the largest national oil companies, international
majors and independent exploration and production companies.
-
The combined company’s rig fleet of 28 floaters and 54 jack-ups will
be among the most technologically-advanced in the industry, capable of
providing a wide range of drilling services to an expanded base of
clients around the world, and will be ideally positioned to meet
increasing levels of customer demand for the highest-specification
ultra-deepwater drillships and harsh environment jack-ups.
-
Within the fleet of 28 floating rigs (drillships and semisubmersibles)
are 25 ultra-deepwater rigs capable of drilling in water depths of
greater than 7,500 feet, with an average age of six years –
establishing this fleet among the youngest and most capable in the
industry. The combined fleet will also have the second-largest fleet
of the highest-specification drillships2 in the industry,
with 11 of these seventh generation ultra-deepwater rigs.
-
The 54-rig jack-up fleet will include 38 units that are 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. Among the combined company’s
jack-up fleet are seven ultra-harsh environment units and nine
additional modern harsh environment rigs.
Unparalleled geographic coverage
-
The combined company will be the most geographically-diverse offshore
driller with current operations and drilling contracts spanning six
continents in nearly every major deep- and shallow-water basin around
the world including the Gulf of Mexico, Brazil, West Africa, North
Sea, Mediterranean, Middle East, Southeast Asia and Australia.
-
Ensco shareholders will gain exposure to the ARO Drilling joint
venture and ultra-harsh environment jack-ups, along with a presence in
Norway. Rowan shareholders gain access to Ensco’s strong relationships
with large deepwater customers and wider geographic footprint, which
includes a presence in Brazil, West Africa, Southeast Asia and
Australia, along with a versatile semisubmersible fleet.
Servicing the broadest customer base, with continued emphasis on
customer satisfaction
-
Customers of the combined company will include most of the leading
national and international oil companies, plus many independent
operators. Customers will benefit from enhanced diversification of
high-quality assets that best meet their drilling requirements.
-
Both companies have long track records of being recognized as leaders
in customer satisfaction, including eight consecutive years ranked #1
in total satisfaction and seven years ranked #1 for high pressure,
high temperature application among offshore drillers by EnergyPoint
Research. The combined company will continue its commitment of
delivering industry-leading service.
Technology focus to differentiate services and lower costs
-
The combined company is dedicated to deploying new technologies and
innovative solutions that differentiate its services and drive
operational integrity and performance at the well site. With a larger,
more diversified fleet, the combined company can economically develop
and deploy these advancements across a wider asset base and global
footprint.
-
The combined company is expected to leverage ARO Drilling’s 20-rig new
build program to develop and deploy leading-edge technology at scale.
Financial Highlights
The combined entity is expected to generate future revenue growth
opportunities as it capitalizes on an expanded, high-quality fleet
serving a larger customer base across a wider geographic footprint.
Estimated annual expense savings of $150 million are expected to be
realized primarily from corporate and regional overlaps, supply chain
efficiencies as well as the standardization of systems, policies and
procedures across the combined organization. Based on these anticipated
annual savings, the planned combination is expected to be accretive to
cash flow per share annually for the combined entity beginning in 2020.
The combined company’s balance sheet is expected to have liquidity of
approximately $3.9 billion, including $1.9 billion of cash and
short-term investments3, providing the new entity with the
financial flexibility to continue investing in the fleet and innovations
aimed at improving drilling efficiencies. The combined company’s credit
profile will benefit from increased scale and significantly enhanced
diversification across regions, rig types, customers and expertise due
to the diverse makeup of its respective businesses. The total estimated
revenue backlog for the combined company is approximately $2.7 billion3,
excluding ARO Drilling’s substantial backlog which is unconsolidated.
Based on the closing price of each company’s shares on 5 October 2018,
the estimated enterprise value of the combined company is $12.0 billion.
Governance
Carl Trowell will become the combined company’s Executive Chairman, Tom
Burke will serve as President and Chief Executive Officer, and Jon
Baksht will serve as Senior Vice President and Chief Financial Officer.
The remaining executive management team for the combined company will be
named at a later date and will comprise executives from both Ensco and
Rowan. Effective upon closing, the combined company’s board of directors
will include Carl Trowell and Tom Burke, plus five additional members
from Ensco’s current board and four additional members from Rowan’s
current board.
The combined company will be domiciled in the United Kingdom, where both
Ensco and Rowan are currently domiciled, and senior executive officers
will be located in London and Houston.
Conditions and Timing
The transaction is subject to approval by the shareholders of Ensco and
Rowan and regulatory authorities, as well as other customary closing
conditions. In addition, the transaction will be subject to court
approval pursuant to a UK court-sanctioned scheme of arrangement. The
transaction is not subject to any financing conditions. Ensco and Rowan
intend to file a joint proxy statement with the Securities and Exchange
Commission as soon as possible. The companies anticipate that the
transaction will close during the first half of 2019.
Advisors
Morgan Stanley & Co. LLC is lead financial advisor to Ensco. HSBC
Securities (USA) Inc. and Citigroup Global Markets Inc. also provided
financial advice to Ensco. Ensco’s legal advisors are Gibson, Dunn &
Crutcher LLP and Slaughter and May. The financial advisor for Rowan
is Goldman Sachs & Co. LLC and its legal advisors are Kirkland & Ellis
LLP and Latham & Watkins LLP.
Conference Call/Webcast
Ensco and Rowan will conduct a conference call to discuss the proposed
combination today at 7:30 a.m. CDT (8:30 a.m. EDT and 1:30 p.m. London
time). The call will be webcast live at www.enscoplc.com
and www.rowan.com.
Alternatively, callers may dial 1-855-239-3215 within the United States
or +1-412-542-4130 from outside the U.S. Please ask for the Ensco/Rowan
conference call. It is recommended that participants call 20 minutes
ahead of the scheduled start time. Callers may avoid delays by
pre-registering to receive a dial-in number and PIN at http://dpregister.com/10125207.
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 webcast replay and transcript of the call
will be available within 36 hours at www.enscoplc.com
and www.rowan.com.
A replay will also be available by phone for six days after the call by
dialing 1-877-344-7529 within the United States or +1-412-317-0088 from
outside the U.S. (conference ID 10125207).
About Ensco
Ensco plc (NYSE: ESV) brings energy to the world as a global provider of
offshore drilling services to the petroleum industry. For more than 30
years, the company has focused on operating safely and going beyond
customer expectations. Ensco is ranked first in total customer
satisfaction in the latest independent survey by EnergyPoint Research –
the eighth consecutive year that Ensco has earned this distinction.
Operating one of the newest ultra-deepwater rig fleets and a leading
premium jackup fleet, Ensco has a major presence in the most strategic
offshore basins across six continents. Ensco plc is an English limited
company (England No. 7023598) with its corporate headquarters located at
6 Chesterfield Gardens, London W1J 5BQ. To learn more, visit the
company’s website at www.enscoplc.com.
About Rowan
Rowan is a global provider of contract drilling services with a current
fleet of 27 mobile offshore drilling units, composed of 23
self-elevating jack-up rigs and four ultra-deepwater drillships. The
company's fleet operates worldwide, including the United States Gulf of
Mexico, the United Kingdom and Norwegian sectors of the North Sea, the
Middle East, the Mediterranean Sea, and Trinidad. Additionally, the
company is a 50/50 partner in a joint venture with Saudi Aramco,
entitled ARO Drilling that owns a fleet of five self-elevating jack-up
rigs that operate in the Arabian Gulf. The company's Class A Ordinary
Shares are traded on the New York Stock Exchange under the symbol "RDC."
For more information on the company, please visit www.rowan.com.
Forward-Looking Statements
Statements included in this document regarding the proposed
transaction, benefits, expected synergies and other expense savings and
operational and administrative efficiencies, opportunities, timing,
expense and effects of the transaction, financial performance, accretion
to cash flows, revenue growth, credit ratings or other attributes of
Ensco plc following the completion of the transaction and other
statements that are not historical facts, are forward-looking statements
(including within the meaning of Section 21E of the Securities Exchange
Act of 1934, as amended, and Section 27A of the Securities Act of 1933,
as amended (the “Securities Act”)).
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 Ensco and Rowan,
delays, costs and difficulties related to the transaction, market
conditions, and Ensco’s financial results and performance following the
completion of the transaction, satisfaction of closing conditions,
ability to repay debt and timing thereof, availability and terms of any
financing and other factors detailed in the risk factors section and
elsewhere in Ensco’s and Rowan’s Annual Report on Form 10-K for the year
ended December 31, 2017 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
Ensco and Rowan 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 and Rowan will file a
joint proxy statement on Schedule 14A with the SEC. Ensco and Rowan
intend that the proposed transaction will be implemented by means of a
court-sanctioned scheme of arrangement between Rowan and Rowan’s
shareholders under the UK Companies Act 2006, as amended, in which case
the issuance of Ensco’s ordinary shares in the proposed transaction
would not be expected to require registration under the Securities Act,
pursuant to an exemption provided by Section 3(a)(10) under the
Securities Act. In the event that Ensco determines to conduct an
acquisition of Rowan pursuant to an offer or otherwise in a manner that
is not exempt from the registration requirements of the Securities Act,
it will file a registration statement with the SEC containing a
prospectus with respect to Ensco’s ordinary shares that would be issued
in the proposed transaction. INVESTORS AND SECURITY HOLDERS OF ENSCO AND
ROWAN ARE ADVISED TO CAREFULLY READ THE JOINT PROXY STATEMENT (WHICH
WILL INCLUDE AN EXPLANATORY STATEMENT IN RESPECT OF ANY SCHEME OF
ARRANGEMENT OF ROWAN, IN ACCORDANCE WITH THE REQUIREMENTS OF THE UK
COMPANIES ACT 2006) AND ANY REGISTRATION STATEMENT/PROSPECTUS (INCLUDING
ALL AMENDMENTS AND SUPPLEMENTS THERETO) WHEN THEY BECOME AVAILABLE
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE TRANSACTION,
THE PARTIES TO THE TRANSACTION AND THE RISKS ASSOCIATED WITH THE
TRANSACTION. A definitive joint proxy statement and any registration
statement/prospectus, as applicable, will be sent to security holders of
Ensco and Rowan in connection with the Ensco and Rowan shareholder
meetings. Investors and security holders may obtain a free copy of the
joint proxy statement (when available), any registration
statement/prospectus, and other relevant documents filed by Ensco and
Rowan 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, any
registration statement/prospectus, and other relevant documents (when
available) by directing a request by mail or telephone to either
Investor Relations, Ensco plc, 5847 San Felipe, Suite 3300, Houston,
Texas 77057, telephone 713-789-1400, or Investor Relations, Rowan
Companies plc, 2800 Post Oak Boulevard, Suite 5450, Houston, Texas
77056, telephone 713-621-7800. 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 Rowan with
the SEC will be available free of charge on Rowan’s website at www.rowan.com/investor-relations.
Participants in the Solicitation
Ensco and Rowan 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 2018 General Meeting of
Shareholders and Rowan’s proxy statement relating to its 2018 General
Meeting of Shareholders, as filed with the SEC on March 30, 2018 and
April 3, 2018, 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, any registration statement and other relevant documents
regarding the transaction, which will be filed with the SEC.
No Offer or Solicitation
This document is not intended to and does not constitute an offer to
sell or the solicitation of an offer to subscribe for or buy or an
invitation to purchase or subscribe for any securities or the
solicitation of any vote in any jurisdiction pursuant to the proposed
transaction or otherwise, nor shall there be any sale, issuance or
transfer of securities in any jurisdiction in contravention of
applicable law. Subject to certain exceptions to be approved by the
relevant regulators or certain facts to be ascertained, the public offer
will not be made directly or indirectly, in or into any jurisdiction
where to do so would constitute a violation of the laws of such
jurisdiction, or by use of the mails or by any means or instrumentality
(including without limitation, facsimile transmission, telephone and the
internet) of interstate or foreign commerce, or any facility of a
national securities exchange, of any such jurisdiction.
Service of Process
Ensco and Rowan are incorporated under the laws of England and Wales. In
addition, some of their respective officers and directors reside outside
the United States, and some or all of their respective assets are or may
be located in jurisdictions outside the United States. Therefore,
investors may have difficulty effecting service of process within the
United States upon those persons or recovering against Ensco, Rowan or
their respective officers or directors on judgments of United States
courts, including judgments based upon the civil liability provisions of
the United States federal securities laws. It may not be possible to sue
Ensco, Rowan or their respective officers or directors in a non-U.S.
court for violations of the U.S. securities laws.
1 Includes two drillships and one jack-up rig under
construction. Excludes Rowan’s 50% interest in ARO Drilling. Pro forma
for Rowan’s sale of the Hank Boswell and Scooter Yeargain to ARO
Drilling expected to be completed prior to completion of the
transaction. Excludes two rigs, Rowan California and Gorilla IV,
earmarked for retirement.
2 Defined as drillships delivered in 2013 or later, equipped
with dual BOP and 2.5 mm lbs. hookload derricks.
3 As of June 30, 2018 or most recent company filing.
View source version on businesswire.com:
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Ensco plc
Nick Georgas, 713-430-4607
Senior Director –
Investor Relations and Communications
or
Tim Richardson,
713-430-4490
Manager – Investor Relations
or
Rowan
Companies plc
Son Vann, 713-960-7655
Vice President Corporate
Development
Source: Ensco plc