Wednesday, February 9, 2011

Ensco to Acquire Pride in $7.3 Billion Deal

by Paula Dittrick, OGJ, Feb 7, 2011
Ensco PLC agreed to buy Pride International Inc. for $7.3 billion, marking the biggest consolidation in the offshore drilling industry since [Swiss-based] Transocean Ltd. announced plans to acquire GlobalSantaFe Corp. in July 2007 (OGJ Online, July 23, 2007).

The transaction would create the second-largest offshore driller worldwide with 74 rigs. The largest offshore drilling fleet belongs to Transocean, which has 136 [sic] rigs. After closing, Ensco will have 21 ultradeepwater and deepwater rigs.

Analysts predicted consolidation among offshore drilling contractors, citing regulatory and market uncertainties since the April 2010 Macondo well blowout in the Gulf of Mexico. [Please read my related blog posts -- D.R.]. BP PLC operated Macondo. The blowout prompted an explosion and fire on Transocean’s Deepwater Horizon semisubmersible, killing 11 crew members and resulting in a massive oil spill.

Following the Pride acquisition, Ensco plans to maintain its headquarters in London. Pride has been looking for a buyer since last year, analysts have said. Norwegian Seadrill Ltd. owns 9.5% of Pride, which is based in Houston.

Terms of the stock and cash transaction call for Pride shareholders to receive 0.4778 share in Ensco and $15.60 for each Pride share. Closing, subject to shareholder approval and other customary closing conditions, is expected for the second quarter, the companies said.

After closing, current Pride shareholders would own about 38% of Ensco’s equity. Terms of the transaction call for Ensco’s eight directors to be joined by two Pride directors. Ensco expects the combined company to realize pretax expense savings of at least $50 million for full year 2012.

“Our rig types, markets, customers, and expertise complement each other with minimal overlap,” said Dan Rabun, Ensco’s chairman, president, and chief executive officer. “Pride has gained valuable expertise building and operating ultradeepwater semisubmersibles and drillships.”

Pride has customers in Brazil and West Africa, two of the world’s fastest-growing deepwater markets. Ensco provides premium jack ups and ultradeepwater semis with a strong presence in the North Sea, Southeast Asia, North America, and the Middle East. [Full story]

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