Offshore drilling contractor Ensco has signed an agreement to acquire Rowan Companies to create a combined company with an enterprise value of $12bn.
Under the terms of the agreement, Rowan shareholders will receive 2.215 Ensco shares for each Rowan share.
Following the completion of the transaction, Ensco and Rowan shareholders will own nearly 60.5% and 39.5% stakes in the combined entity, respectively.
The transaction is expected to result in creating a major offshore driller with a fleet size of 82 rigs and a presence across six continents.
Ensco president and chief executive officer Carl Trowell said: “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.”
The rig fleet of the combined entity will include 28 floaters and 54 jack-ups, capable of providing a wide range of drilling services to an expanded base of clients.
Within the fleet of 28 floating rigs, the combined company will possess 25 ultra-deepwater rigs that will be capable of drilling in water depths of greater than 7,500 feet.
The transaction is subject to approval by the shareholders of Ensco and Rowan and regulatory authorities, as well as other customary closing conditions.
It is expected to be completed during the first half of 2019.
Upon closing, the combined company will be domiciled in the UK, where both the two companies are currently domiciled.
The transaction will enable Ensco shareholders to gain exposure to the ARO Drilling joint venture and ultra-harsh environment jack-ups, along with a presence in Norway.
The merged company is anticipated to leverage ARO Drilling’s 20-rig new build program to develop and deploy leading-edge technology at scale.
Trowell said: “Through this combination, Ensco shareholders will uniquely benefit from Rowan’s strategic joint venture with Saudi Aramco, ARO Drilling, while all stakeholders will share in meaningful cost savings and even greater upside to improving market conditions as the industry recovery continues gaining momentum.”