Offshore rig contractor Ensco to buy Pride International for $7.3B

By Phaedra Friend Troy

Creating the second-largest offshore drilling rig contractor, Ensco (NYSE:ESV) and Pride International (NYSE:PDE) have entered into a definitive merger agreement whereby Ensco will purchase Pride in a cash and stock transaction valued at an estimated $7.3 billion.

London-based rig operator Ensco will pay $41.60 per share of Houston-based contractor Pride, which is a premium of 21 percent of Friday’s closing price. The definitive merger agreement was unanimously approved by the board of directors of both companies.

"The combination is an ideal strategic fit, as our rig types, markets, customers and expertise complement each other with minimal overlap,” said Dan Rabun, Ensco’s chairman and CEO.

Headquartered in Houston, Pride International employs some 4,000 personnel worldwide and includes four deepwater drillships, two deepwater drillships under construction, six deepwater semisubmersibles, six midwater semisubmersibles, seven jackups and two managed deepwater units.

“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,” Rabun added. “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."

To be headquartered in the UK, the combined company will retain the name of Ensco, and Dan Rabun will remain as chairman, president and CEO. Additionally, James Swent will continue to serve as senior vice president, but the rest of the executive management team will be named at a later date.

Based on the closing price of each company’s shares on Feb. 4, 2011, the combined company has an estimated enterprise value of $16 billion and total estimated revenue backlog of $10 billion.

Second-Largest Offshore Rig Fleet

The combined company will own 74 rigs, including 21 ultra-deepwater and deepwater drilling rigs and more active jackups than any other driller.

"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,” said Pride’s President and CEO Louis Raspino. “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 new company will hold 27 floaters, including 21 deepwater drilling rigs, seven of which have been delivered since 2008, and another five rigs are expected to be delivered before 2013. In fact, 13 of the rigs are rated for waters measuring 7,500 feet or deeper.

The company’s jackup fleet will include 47 rigs, all of which are independent leg design and 27 of which can drill in waters measuring 300 feet deep or greater.

Additionally, the combined company will have rigs contracted in 25 different countries on six continents, including Brazil, West Africa, the North Sea, the Mediterranean Sea, Southeast Asia, US Gulf of Mexico, Mexico, Middle East and Australia.

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