ESV Ensco Plc New

By Micah Maidenberg 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (October 9, 2018).

Offshore driller Ensco PLC has agreed to buy Rowan Cos., a deal the companies say will help them win business as the offshore oil market starts to grow again.

Under terms of the deal, Rowan shareholders will receive 2.215 Ensco shares for each of their Rowan shares. The deal would offer Rowan shareholders roughly no premium based on Friday's closing price of $18.78. Ensco stockholders will own 60.5% of the combined company, with Rowan shareholders owning the remaining.

Ensco's market capitalization is currently $3.7 billion, while Rowan's is $2.4 billion, according to FactSet.

The deal is expected to close in the first half of next year.

As oil prices rise and some analysts predict the per-barrel price could reach $100, oil companies are anticipating a stronger environment for expensive offshore projects.

Ensco Chief Executive Carl Trowell, who will serve as executive chairman of the combined company said in prepared remarks that stakeholders in the combined firm will share in "meaningful cost savings and even greater upside to improving market conditions as the industry recovery continues gaining momentum."

The merged firm expects to save around $150 million in pre-tax expenses.

Ensco shareholders will also gain exposure to a joint venture that Rowan has entered into with Saudi Aramco, Mr. Trowell added.

Rowan's current CEO, Tom Burke, will serve in that role at the combined company, which will be based in the U.K.

Write to Micah Maidenberg at micah.maidenberg@wsj.com

(END) Dow Jones Newswires

October 09, 2018 02:47 ET (06:47 GMT)

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