Proxy Advisory Firm Glass Lewis Recommends
Ensco plc Shareholders Vote “FOR” Acquisition of Atwood
Oceanics
Ensco plc (NYSE: ESV) ("Ensco" or the “Company”) today announced
that leading independent proxy advisory firm Glass Lewis ("Glass
Lewis"), has recommended that Ensco shareholders vote “FOR” the
proposed all-stock transaction with Atwood Oceanics, Inc. (NYSE:
ATW) (“Atwood”) at the company’s upcoming general meeting of
shareholders on 5 October 2017.
In making its recommendations, Glass Lewis noted*:
- “…we find that the proposed transaction
appears strategically reasonable and, on balance, financially
acceptable from the perspective of Ensco and its
shareholders.”
- “We recognize that the offshore
drilling industry would likely benefit from consolidation and that,
in this regard, Ensco has taken a proactive approach to reviewing a
range of opportunities, including the potential acquisition of
assets and larger scale transaction.”
- “Strategically, the proposed
transaction would create a larger offshore drilling company with a
broader portfolio of assets and greater scale. Atwood and Ensco
currently have limited customer overlap and the combined company
would have a broader and more diversified customer base as well as
a diversified geographic profile.”
- “The combined company is expected to
benefit from approximately $65 million of pre-tax annual cost
savings, a majority of which are expected to be achieved in 2018,
with the full amount expected to be realized on a run-rate basis by
2019.”
- “Moreover, the combined company would
have a strong balance sheet and a reasonable leverage profile, in
our view, with a pro forma net debt to capitalization ratio of 29%
as at March 31, 2017.”
- “Overall, we see no cause for
significant shareholder concern with the strategic rationale of the
proposed transaction, which will combine the complementary
operations and assets of Atwood and Ensco, providing greater scale
and opportunities to achieve meaningful synergies, in our
view.”
Carl Trowell, Ensco President and Chief Executive Officer,
stated: “We are pleased that Glass Lewis recognizes the
compelling strategic and financial merits of Ensco’s acquisition of
Atwood and has urged shareholders to support this combination. We
believe the offshore drilling sector is entering a recovery phase
following an extended downturn and that now is the time to make
counter-cyclical investments in the highest-specification assets to
generate long-term shareholder value. We are already seeing asset
pricing for these rigs begin to inflect and, going forward, we
believe the pricing of these assets will increase sharply given the
limited number of these rigs in the global supply as well as fierce
competition from other drillers looking to purchase highest-quality
assets at all-time cyclical lows.”
“By adding Atwood now, at a key juncture in the market cycle, we
are acquiring high-quality assets at a compelling price reflecting
cyclical lows, furthering our ability to meet increasing customer
demand and strengthening our competitive position, which coupled
with significant expected synergies, will generate meaningful,
long-term value for our shareholders. With Atwood, we will become a
larger company, with a higher-quality rig fleet, which will greatly
improve our access to liquidity and provides us with additional
financial flexibility at a pivotal point in the market recovery. As
we move through the next stage of the market cycle, we will
continue to make disciplined capital deployment decisions that
preserve our financial strength and flexibility and best position
Ensco in the offshore recovery.”
“Since announcing the merger, Ensco has engaged with many
shareholders and we are pleased with the support we have received
for the transaction and the recognition of the significant value
this acquisition will create. We look forward to the general
meeting of shareholders on 5 October as we work towards completing
the transaction and fully realizing the benefits that Atwood brings
to the combined company.”
Ensco notes that the acquisition of Atwood will create a
financially strong global offshore drilling leader with a wide
range of fleet capabilities, a diverse client base and a global
footprint spanning six continents with operations in nearly every
major deep- and shallow-water basin.
- Ongoing prudent financial management
and capital deployment by Ensco leadership and
the Board of Directors, who have a history of making sound
strategic capital decisions to best position the Company through
various stages of the market cycle.
- Ensco’s targeted investments in
technology and innovation that improve the Company’s
processes, systems and intellectual property,
giving Ensco a competitive advantage in the offshore
recovery.
- Ensco’s continuous drive toward
industry-leading safety and operational excellence, which
position the Company well to continue delivering high levels of
performance to customers.
- The enhancement of Ensco’s
fleet with the addition of Atwood’s best-in-class assets
at attractive, below-market values, which further Ensco’s ability
to meet increasing customer demand for high-specification
assets.
- Significant shareholder value
creation opportunities from the acquisition, which is expected
to generate double-digit accretion for Ensco shareholders
and total synergies that create more than $500 million of
present value at a 10% discount rate.
- A strong pro forma balance
sheet with financial flexibility and sufficient liquidity
to cover debt maturities through 2024.
- A disciplined approach to the
acquisition by Ensco’s management and Board of Directors,
who participated in a competitive process, with the premium at
the time of the offer less than 10% higher than the market value of
the competing bid.
The Company also acknowledged the report recently issued by
proxy advisory firm Institutional Shareholder Services (“ISS”)
regarding the proposed all-stock transaction with Atwood. The
company firmly believes that ISS reached the wrong conclusion in
failing to recommend that shareholders vote “FOR” the transaction.
Even ISS, in its report, recognized the logic of the combination,
noting*:
- “…the transaction is a model
opportunity (what could perhaps be called ‘opportunistically
strategic’) that achieves two ends at once—a deep value bet with
limited downside and an embedded option on full market recovery,
plus a strategic fit that defends and/or extends Ensco's
competitive position.”
- “The quality of the Atwood assets is
indeed recognized across the industry. Not only that, their
strategic fit with Ensco's current fleet is also apparent, as both
companies have blended fleets of moderate depth jackups and
highspec, ultra-deepwater drillships.”
- “Ensco is presenting a deal during the
most severe downturn in the industry in the last several decades.
From that perspective, the timing of the transaction seems
appropriate.”
Ensco notes that the ISS report highlights the potential market
conditions surrounding the transaction and cites the proposed
acquisition of Atwood as a “model opportunity”. However, ISS
appears to have disregarded both Ensco and third-party views on the
market outlook and the competitive dynamics moving forward.
Instead, ISS has substituted its subjective judgment for rigorous
assessment of the market by Ensco’s Board of Directors and
management, while failing to include and inconsistently applying
information throughout their analysis. Ensco has consistently cited
the increasing consolidation within the industry; stabilizing
breakeven levels on offshore projects; increasing confidence from
major oil companies towards their offshore projects and improving
utilization rates for the global rig fleet. These points have also
all been echoed by Ensco’s offshore drilling peers in recent months
as well as by Glass Lewis. Ensco believes investors will
independently evaluate quantifiable factors related to market
activity.
Ensco’s Board of Directors unanimously recommends that Ensco
shareholders vote “FOR” the proposal to combine with Atwood in an
all-stock transaction at the upcoming general meeting of
shareholders, which is necessary to complete the acquisition.
Ensco’s general meeting of shareholders is scheduled to take
place on 5 October 2017 at 3:00 p.m. (London time) at the offices
of Slaughter and May, One Bunhill Row, London EC1Y 8YY, England.
All shareholders of record of Ensco’s common stock as of the close
of business on 23 August 2017 will be entitled to vote their shares
either in person or by proxy at the shareholder meeting.
Atwood’s 2017 special meeting of shareholders is scheduled for 5
October 2017.
As previously announced on 30 May 2017, Ensco and Atwood have
entered into a definitive merger agreement under which Ensco will
acquire Atwood in an all-stock transaction that was unanimously
approved by each company’s board of directors. Under the terms of
the merger agreement, Atwood shareholders will receive 1.60 shares
of Ensco for each share of Atwood common stock for a total value of
$10.72 per Atwood share based on Ensco’s closing share price of
$6.70 on 26 May 2017. Upon close of the transaction, Ensco and
Atwood shareholders will own approximately 69% and 31%,
respectively, of the outstanding shares of Ensco plc. There are no
financing conditions for this transaction. On 29 June 2017, Ensco
and Atwood announced early termination of the waiting period under
the U.S. Hart-Scott-Rodino Antitrust Improvements Act of 1976. The
company anticipates closing the transaction in the first week of
October 2017.
Shareholders who have questions about the merger and/or the
process to submit proxies or voting instructions may contact
Ensco’s proxy solicitors, D.F. King at +1 (888) 626-0988 or
MacKenzie Partners at +1 (800) 322-2885, or Atwood’s proxy
solicitor, Innisfree M&A Incorporated at +1 (888) 750-5834.
Banks and Brokers may call collect at +1 (212) 269-5550 or +1 (212)
929-5500 for Ensco or +1 (212) 750-5833 for Atwood. Copies of the
proxy statement/prospectus and/or proxy card may be obtained from
the respective proxy solicitors.
Shareholders of both companies are encouraged to read the proxy
materials in their entirety as they provide, among other
information, a discussion of the reasons behind the recommendation
of each company’s board of directors that shareholders vote “FOR”
the approvals necessary to complete the proposed merger.
*Permission to use quotations neither sought nor obtained
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 sixth 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 registered office and corporate
headquarters located at 6 Chesterfield Gardens, London W1J 5BQ. To
learn more, visit our website at www.enscoplc.com.
Forward-Looking Statements
Statements included in this release 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 discounted cash flows, revenue growth,
future dividend levels, credit ratings or other attributes of Ensco
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). 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 Atwood,
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 Atwood’s Annual Report
on Form 10-K for the year ended December 31, 2016 and September 30,
2016, respectively, 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 release is as of
the date of the release. Except as required by law, Ensco disclaims
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
In connection with the proposed transaction, Ensco has filed a
registration statement on Form S-4, including a definitive
joint proxy statement/prospectus of Ensco and Atwood, with the SEC.
INVESTORS AND SECURITY HOLDERS OF ENSCO AND ATWOOD ARE ADVISED TO
CAREFULLY READ THE REGISTRATION STATEMENT AND DEFINITIVE PROXY
STATEMENT/PROSPECTUS (INCLUDING ALL AMENDMENTS AND SUPPLEMENTS
THERETO) BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE
TRANSACTION, THE PARTIES TO THE TRANSACTION AND THE RISKS
ASSOCIATED WITH THE TRANSACTION. A definitive joint proxy
statement/prospectus has been sent to security holders of Ensco and
Atwood in connection with the Ensco and Atwood shareholder
meetings. Investors and security holders may obtain a free copy of
the definitive joint proxy statement/prospectus and other relevant
documents filed by Ensco and Atwood with the SEC from the SEC’s
website at www.sec.gov. Security holders and other interested
parties are also be able to obtain, without charge, a copy of the
definitive joint proxy statement/prospectus and other relevant
documents by directing a request by mail or telephone to either
Investor Relations, Ensco plc, 5847 San Felipe, Suite 3300,
Houston, Texas 77057, telephone 713-430-4607, or Investor
Relations, Atwood Oceanics, Inc., 15011 Katy Freeway,
Suite 800, Houston, Texas 77094, telephone 281-749-7840.
Copies of the documents filed by Ensco with the SEC are available
free of charge on Ensco’s website at www.enscoplc.com under the tab
“Investors.” Copies of the documents filed by Atwood with the SEC
are available free of charge on Atwood’s website at www.atwd.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.
Participants in the Solicitation
Ensco and Atwood 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 2017 General Meeting of Shareholders and
Atwood’s proxy statement relating to its 2017 Annual Meeting of
Shareholders, as filed with the SEC on 31 March 2017 and 9
January 2017, 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 definitive joint proxy statement/prospectus and other relevant
documents regarding the transaction, which have been filed with the
SEC.
No Offer or Solicitation
This release 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 is incorporated under the laws of England and Wales. In
addition, some of its officers and directors reside outside the
United States, and some or all of its 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 or its
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 or its officers or directors in a non-U.S. court for
violations of the U.S. securities laws.
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version on businesswire.com: http://www.businesswire.com/news/home/20170922005435/en/
Ensco plcInvestor & Media Contacts:Nick Georgas,
713-430-4607Director – Investor Relations and CommunicationsorTim
Richardson, 713-430-4490Manager – Investor Relations
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