Pride International, Inc. and Marine Drilling Companies, Inc. today announced that they have entered into a definitive agreement to merge in a tax-free, stock-for-stock transaction that will produce the industry's third largest offshore drilling contractor, based on enterprise value. Based upon the closing stock prices on Wednesday, May 23, 2001, of $32.65 for Pride International and $27.72 for Marine Drilling, the total enterprise value of the combined company would be approximately $6.2 billion, consisting of $4.5 billion equity and $1.7 billion net debt.
As a result of the merger, which was approved by both companies' boards of directors, common stockholders of each company will receive one share in a newly formed Delaware company for each share of either Pride International or Marine Drilling that they currently own. Based on the number of common shares currently outstanding, Pride International stockholders would own approximately 56 percent of the common equity of the combined company, and Marine Drilling stockholders would own approximately 44 percent. The transaction is expected to be accountedfor using the pooling-of-interests method and to be accretive to earnings per share in the first year after closing. The combined company will retain the Pride International, Inc. name and will trade on the New York Stock Exchange under the symbol "PDE." Robert L. Barbanell, currently Chairman of Marine Drilling, will serve as Chairman of the combined company, and Paul A. Bragg, currently President and Chief Executive Officer of Pride International, will be President and Chief Executive Officer. James W. Allen, currently Chief Operating Officer of Pride International, will serve as Chief Operating Officer, and Earl W. McNiel, currently Chief Financial Officer of Pride International, will serve as Chief Financial Officer of the combined company. T. Scott O'Keefe, currently Chief Financial Officer of Marine Drilling, will serve as Vice President of Strategic Planning. The combined company will have an eight-member board comprised of four current members from the Pride International board and four current members from the Marine Drilling board.
The combined company will be one of the largest offshore drilling contractors in the world with an offshore fleet of 77 rigs, including 2 drillships, 11 semisubmersible rigs, 35 jackup rigs, and 29 tender-assist, barge and platform rigs. Six of these rigs are newly constructed and capable of operating in water depths of 5,000 feet or more. The combined company will also operate a fleet of 246 land rigs in the international markets. The combined company will have its principal offices in Houston, Texas and employ more than 10,000 people worldwide.
Paul A. Bragg, President and Chief Executive Officer of Pride International said, "The merger with Marine Drilling creates a premier global drilling contractor with strong positions in the deepwater markets, in the jackup markets, particularly in the Gulf of Mexico, as well as in the Latin America land market. This transaction combines Pride's operating leverage with Marine Drilling's financial strength to create an extraordinary company with size, geographic scope and balance sheet flexibility. At the close of the transaction, we expect to have a net-debt to capitalization ratio of 48 percent, or 30 percent assuming conversion of Pride's convertible debentures. Through our leading market positions and outstanding growth prospects, we expect to deliver superior stockholder value, both near and long-term."
Jan Rask, President and Chief Executive Officer of Marine Drilling said, "This merger combines two strong companies with complementary assets. Pride International is the right partner at the right time. Because of a strong demand for jackup rigs, we are gradually approaching replacement cost pricing, and I can think of no other combination which would result in the upside that Pride and Marine Drilling represents, together with a balanced financial position. By bringing together two great organizations, we expect to build on the successes of each company to take advantage of future growth opportunities in our consolidating industry."
The transaction is conditioned upon, among other things, the approval of each company's shareholders and completion of the Hart-Scott-Rodino antitrust review process. The companies expect the transaction to be completed late in 2001. Salomon Smith Barney Inc. is serving as the financial advisor and Baker Botts L.L.P. is serving as legal counsel to Pride International. Morgan Stanley is serving as the financial advisor and Porter & Hedges, L.L.P. is serving as legal counsel to Marine Drilling.
Pride International, Inc. headquartered in Houston, Texas, is one of the world's largest drilling contractors. The Company provides offshore drilling, land drilling and related services in more than 20 countries, operating a diverse fleet of 305 rigs, including two ultra-deepwater drillships, nine semisubmersible rigs, 19 jackup rigs, 29 tender-assist, barge and platform rigs, as well as 246 land rigs.
Marine Drilling Companies, Inc. is an offshore drilling contractor with a fleet of 17 offshore drilling rigs and one jackup rig currently configured as an accommodation unit located in the U.S. Gulf of Mexico and select international markets. The drilling rig fleet consists of 15 jackups and two deep-water semi-submersibles.
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