Advisory firm Glass Lewis has recommended that Ensco plc shareholders vote “FOR” the US$839 million proposed all-stock transaction with Atwood Oceanics at the company’s upcoming general meeting of shareholders on 5 October 2017.
“…we find that the proposed transaction appears strategically reasonable and, on balance, financially acceptable from the perspective of Ensco and its shareholders,” Glass Lewis said in its recommendation.
“Strategically, the proposed transaction would create a larger offshore drilling company with a broader portfolio of assets and greater scale. Atwood and Ensco currently have limited customer overlap and the combined company would have a broader and more diversified customer base as well as a diversified geographic profile.
“Moreover, the combined company would have a strong balance sheet and a reasonable leverage profile, in our view, with a pro forma net debt to capitalization ratio of 29% as at 31 March 2017.
“Overall, we see no cause for significant shareholder concern with the strategic rationale of the proposed transaction, which will combine the complementary operations and assets of Atwood and Ensco, providing greater scale and opportunities to achieve meaningful synergies, in our view,” the advisory firm said.
Carl Trowell, Ensco president and CEO said that the company was pleased that Glass Lewis has urged shareholders to support the merger.
“We believe the offshore drilling sector is entering a recovery phase following an extended downturn and that now is the time to make counter-cyclical investments in the highest-specification assets to generate long-term shareholder value. We are already seeing asset pricing for these rigs begin to inflect and, going forward, we believe the pricing of these assets will increase sharply given the limited number of these rigs in the global supply as well as fierce competition from other drillers looking to purchase highest-quality assets at all-time cyclical lows.
“By adding Atwood now, at a key juncture in the market cycle, we are acquiring high-quality assets at a compelling price reflecting cyclical lows, furthering our ability to meet increasing customer demand and strengthening our competitive position, which coupled with significant expected synergies, will generate meaningful, long-term value for our shareholders. With Atwood, we will become a larger company, with a higher-quality rig fleet, which will greatly improve our access to liquidity and provides us with additional financial flexibility at a pivotal point in the market recovery. As we move through the next stage of the market cycle, we will continue to make disciplined capital deployment decisions that preserve our financial strength and flexibility and best position Ensco in the offshore recovery,”Trowell said.
Ensco’s board of directors unanimously recommends that Ensco shareholders vote “FOR” the proposal to combine with Atwood in an all-stock transaction at the upcoming general meeting of shareholders, which is necessary to complete the acquisition.
Ensco’s general meeting of shareholders is scheduled to take place on 5 October 2017 at 3:00 p.m. (London time) at the offices of Slaughter and May, One Bunhill Row, London EC1Y 8YY, England. All shareholders of record of Ensco’s common stock as of the close of business on 23 August 2017 will be entitled to vote their shares either in person or by proxy at the shareholder meeting.
Atwood’s 2017 special meeting of shareholders is scheduled for 5 October 2017.
On 30 May 2017, Ensco and Atwood entered into a definitive merger agreement under which Ensco will acquire Atwood in an all-stock transaction that was unanimously approved by each company’s board of directors.
Under the terms of the merger agreement, Atwood shareholders will receive 1.60 shares of Ensco for each share of Atwood common stock for a total value of $10.72 per Atwood share based on Ensco’s closing share price of $6.70 on 26 May 2017. Upon close of the transaction, Ensco and Atwood shareholders will own approximately 69% and 31%, respectively, of the outstanding shares of Ensco plc. There are no financing conditions for this transaction. On 29 June 2017, Ensco and Atwood announced early termination of the waiting period under the US Hart-Scott-Rodino Antitrust Improvements Act of 1976. The company anticipates closing the transaction in the first week of October 2017.
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Ensco, Atwood set shareholder vote meetings