By combining complementary resources, GlobalSantaFe will have the operational scale and market coverage to deliver superior service to the world's leading oil and gas companies. The new company will be the premier worldwide contract driller, with one of the industry's youngest, most diversified and technologically advanced drilling fleets. The new company will also operate over 100 rigs in the world's key drilling markets, with its own fleet of 59 offshore and 31 land drilling rigs and 13 rigs operated for others. In addition, the new company will be the world's leading provider of drilling management services, including turnkey and project management.
Under the terms of the transaction, Global Marine stockholders will receive a fixed ratio of 0.665 shares of newly issued GlobalSantaFe stock for each share of Global Marine and will own approximately 50.6% of the combined company. Gains on the transaction will be taxable to Global Marine shareholders. The transaction will not be taxable to Santa Fe shareholders, who will retain their existing shares and will own approximately 49.4% of the combined company. GlobalSantaFe will have approximately 233 million shares outstanding. The transaction is expected to be modestly accretive to GlobalSantaFe's earnings and substantially accretive to GlobalSantaFe's cash flow in 2002.
For the 12 months ended June 30, 2001, the two companies combined had approximately $2 billion in geographically diverse revenues and approximately $650 million in EBITDA. Following the consummation of the transaction, GlobalSantaFe will have the drilling industry's strongest balance sheet, with pro forma book equity in excess of approximately $4.5 billion and debt to total capitalization of less than 18 percent. Both managements expect GlobalSantaFe to continue Santa Fe's annual dividend policy of $0.13 per share. They also expect GlobalSantaFe to achieve annual cost savings and operating synergies of approximately $25 million by the end of 2002.
Bob Rose, Chairman, President and Chief Executive Officer of Global Marine, will serve as Chairman of the combined company. Sted Garber, Santa Fe President and Chief Executive Officer, will serve in those same positions at GlobalSantaFe. Gordon Anderson, current Chairman of Santa Fe, is expected to serve on the 14-member Board of Directors of the combined company, which will consist of equal representation from each company.
"This transaction, which is a merger of equals in every sense of the word, brings together two of the most talented and respected management teams in our industry," said Mr. Rose. "Our two companies share common operating philosophies and employee cultures, and I am confident that the new GlobalSantaFe will be a stronger, more dynamic partner for all of our customers. The new company will also be a larger, more competitive force in a rapidly consolidating sector and will be ideally positioned to finance future growth opportunities."
Commenting on the merger, Mr. Garber said: "Shareholders will benefit from owning a company with enhanced operational scale and expertise and one of the industry's youngest, most technologically advanced drilling fleets. Our state-of-the-art deepwater drilling fleet, along with the largest heavy duty harsh environment and premium jackup fleets, will enable us to meet the increasing demands of our diverse customer base. Likewise, the employees of GlobalSantaFe will benefit from expanded career opportunities as part of a new and growing global enterprise."
Nader H. Sultan, Deputy Chairman and Chief Executive Officer of Kuwait Petroleum Corporation (KPC) described the merger as "a strategic repositioning of Santa Fe International's competitive presence in the drilling market which enables Kuwait Petroleum to enhance the value of its investment in Santa Fe."
KPC, which owns approximately 37.7% of Santa Fe through a wholly-owned subsidiary, SFIC Holdings (Cayman), Inc., will continue to own approximately 43.5 million shares (its current ownership in Santa Fe), representing approximately 18.7% of pro forma shares outstanding of the new company. KPC has approved the terms of the merger and has entered into a shareholder agreement in support of the transaction.
The management team will include the following appointments: Jon Marshall, Executive Vice President and Chief Operating Officer; Seals McCarty, Executive Vice President, Finance and Administration; Jim McCulloch, Senior Vice President and General Counsel; and Matt Ralls, Senior Vice President and Chief Financial Officer.
The transaction is conditioned upon, among other things, the approval of each company's shareholders and is subject to customary regulatory approvals, including completion of the Hart-Scott-Rodino antitrust process. The transaction is expected to close by year-end 2001.
Credit Suisse First Boston served as financial advisor and Shearman & Sterling provided legal counsel to Santa Fe. Morgan Stanley served as financial advisor and Baker Botts LLP provided legal counsel to Global Marine. Salomon Smith Barney served as financial advisor and Skadden, Arps, Slate, Meagher & Flom LLP provided legal counsel to Kuwait Petroleum Corporation.
Most Popular Articles