MercoPress. South Atlantic News Agency

Ensco becomes the world’s second largest off-shore drilling company

The company has 21 ultra-deepwater and deepwater platforms

UK based oil drilling services company Ensco PLC said Monday it has agreed to buy US rival Pride International Inc. in a 7.3 billion US dollars cash and stock deal that will create the world's second largest off-shore drilling company.

The combined group will be valued at 16 billion USD and have a total of 74 rigs, including 21 ultra-deepwater and deepwater platforms, in key locations around the world.

“The combination is an ideal strategic fit, as our rig types, markets, customers and expertise complement each other with minimal overlap” Ensco Chief Executive Officer Dan Rabun said in a statement.

The deal, valued at a total of 41.60 USD per share, is a 21% premium to the Houston-based Pride's closing price on Friday.

In the shares and stock split offer, Pride stockholders will receive 0.4778 newly issued shares of London-based Ensco, plus 15.60 USD in cash for each share of Pride common stock. That will leave Ensco stockholders holding around 62% and Pride stockholders owning about 38% of the combined company when the deal closes, anticipated as early as the second quarter.

Ensco expects the combined company to realize pretax expense synergies of at least 50 million USD in 2012 and beyond. The total estimated revenue backlog for the combined company is around 10 billion USD, which Ensco plans to use to support further growth.

The deal is also expected to boost estimated earnings per share of 5.11 USD in 2012 by more than 10%. The combined company will retain the name Ensco PLC and will remain domiciled in Britain with “virtually all” the senior executives located in London.

Ensco, which trades on the New York Stock Exchange, was shifted to Britain in 2009 to take advantage of greater access to customers and European international investors, an improved time zone overlap for its international operations and a more competitive tax position.

The combined company will be among the most geographically diverse drillers with current operations and drilling contracts spanning more than 25 different countries on six continents in nearly every major deep and shallow-water basin around the world.

Regions will include major markets in Southeast Asia, the North Sea, Mediterranean, U.S. Gulf of Mexico, Mexico, Middle East and Australia, as well as the fastest-growing deepwater markets, Brazil and West Africa.

Within a fleet of 27 floating rigs are 21 deepwater drilling rigs, including seven rigs delivered since 2008 and another five rigs expected to be delivered between now and 2013.