This morning, offshore drillers Atwood Oceanics (ATW 9.96, +1.88 +23.27%) and Ensco (ESV 6.30, -0.40 -5.97%) announced a merger deal which when combined would boast a driller with a combined enterprise value of $6.9 billion with a revenue backlog of about $3.7 billion.
Upon closing, ESV will add six ultra-deepwater floaters, including four of the most capable drillships in the industry, and five high-specification jackups. The combined company will have a fleet of 63 rigs, comprised of ultra-deepwater drillships, versatile deep- and mid-water semisubmersibles and shallow-water jackups, along with a diverse customer base of 27 national oil companies, supermajors and independents.
The economics of the deal hold that ESV, the larger of the two parties by market capitalization, would acquire ATW in an all-stock transaction. ATW shareholders will receive 1.60 shares of ESV for each share of ATW common stock for a total value of $10.72 per ATW share.
ESV expects to realize annual pre-tax expense synergies of about $65 million for full year 2019 and beyond. The combination is also expected to be accretive on a discounted cash flow basis.
ESV’s executive management will continue with Carl Trowell as President and Chief Executive Officer, Carey Lowe as Executive Vice President and Chief Operating Officer, and Jon Baksht as Senior Vice President and Chief Financial Officer. ESV’s Chairman will continue to be Paul Rowsey and the board of directors will include Carl Trowell, plus two members from ATW’s current board effective at closing. The company will continue to be domiciled in the UK and senior executive officers will be located in London and Houston. The shares will continue to trade on the New York Stock Exchange under the symbol “ESV”.
Offshore drilling peers trade split today following the M&A news in the space NE +1.60%, RDC +1.30%, RIG -2.88%, DO -4.28%, SDRL -11.92%.