Offshore Drillers Ensco, Rowan To Combine In $2.4 Billion Merger

[Editor’s note: This story was updated at 11:37 a.m. CST Oct. 8.]

Offshore driller Ensco Plc (NYSE: ESV) said Oct. 8 it will buy out rival Rowan Cos. Plc (NYSE: RDC) in an all-stock acquisition worth about $2.4 billion.

As part of the merger agreement, Rowan shareholders will receive 2.215 Ensco shares for each Rowan share, or about 281 million Ensco shares, to own roughly 39.5% of the combined company. Ensco shareholders are expected to hold a roughly 60.5% stake.

The merger will result in a combined enterprise value of $12 billion and annual cost synergies of about $150 million, or roughly 7% of combined company’s operating and general and administrative (G&A) expenses, according to Luke M. Lemoine, senior oilfield service analyst with Capital One Securities Inc.