LONDON, Oct. 8, 2018
/PRNewswire/ -- 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.
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.
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SOURCE Rowan Companies plc