Offshore drilling giants Ensco and Rowan Companies have entered into a definitive transaction agreement to combine the two companies in an all-stock transaction.
The transaction has been approved by both boards and the enlarged company will have an enterprise value of $12bn, 60.5% controlled by Ensco and 39.5% controlled by Rowan. Saudi Aramco, who partner Rowan in the ARO Drilling joint venture have also consented to the deal.
In a joint announcement, the two company say they expect to realise annual pre-tax expense synergies of around $150m, with an aim to achieve 75% of the synergies within one year of the closing of the deal. Closing is expected in the first half of 2019.
Ensco president and CEO Carl Trowell will serve as executive chairman of the combined company, while Rowan president and CEO Tom Burke will serve as president and CEO.
“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,” Trowell commented.
“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,” added Burke.
The new combined company will have 82 rigs, made up of 28 floaters and 54 jackups. It will be headquartered in London, with senior executive officers in both London and Houston.