Broad Portfolio of High-Specification Floaters
and Jack-upsDiverse Customer Base Includes Most of the Largest
Holders of Offshore ReservesBroadest Geographic Presence of Any
Offshore DrillerWell Capitalized with Combined Liquidity of $3.9
Billion$150 Million of Anticipated Annual Expense
SynergiesAccretive to Cash Flow Per Share in First Full Year
Following ClosingClear Leader in Customer Satisfaction with Strong
Focus on Safety and Operations
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.
This press release features multimedia. View
the full release here:
https://www.businesswire.com/news/home/20181008005254/en/
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: https://www.businesswire.com/news/home/20181008005254/en/
Ensco plcNick Georgas, 713-430-4607Senior Director – Investor
Relations and CommunicationsorTim Richardson, 713-430-4490Manager –
Investor RelationsorRowan Companies plcSon Vann, 713-960-7655Vice
President Corporate Development
Ensco (NYSE:ESV)
Historical Stock Chart
From Aug 2024 to Sep 2024
Ensco (NYSE:ESV)
Historical Stock Chart
From Sep 2023 to Sep 2024