Ensco buys US oil driller in £4.5bn deal

LONDON-BASED drilling rig operator Ensco has agreed to buy US rival Pride International in a $7.3bn (£4.5bn) deal to create the world’s second-largest offshore driller by number of customers.

The cash and stock transaction is valued at $41.60 per share based on Ensco’s closing share price on Friday last week and represents a 21 per cent premium to Pride’s closing price.

The Houston-based oil firm’s shareholders will receive 0.4778 new shares of Ensco as well as $15.60 in cash for each share of Pride common stock they hold.

The deal, which will close as soon as the second quarter of this year, will create a huge deepwater drilling firm second only to Transocean in terms of number of rigs.

The merger comes almost one year after the disastrous Gulf of Mexico oil spill and as the offshore drilling industry attempts to regroup.

However, major energy companies have not been deterred by the Macondo well leak.

Oil giants such as Chevron and Exxon Mobil are expected to continue spending billions of dollars on new offshore fields, encouraged by strong US oil prices, which are hovering near $90 per barrel.

The combined company will operate a fleet of 27 floating rigs, including 21 deepwater drilling platforms, as well as 47 jackup rigs for shallower drilling.

Ensco was advised by Deutsche Bank and Citibank on the merger, while Goldman Sachs advised Pride.

Ensco chief executive Dan Rabun said: “The combination is an ideal strategic fit, as our rig types, markets, customers and expertise complement each other with minimal overlap.”

Ensco is listed in New York but decided to move its headquarters to London from Dallas, Texas in December 2009. The group will continue to be UK-based.