The purchase price for the assets being acquired is $108 million, subject to certain possible adjustments; no financial working capital is included. Oceaneering expects to fund the purchase price by using existing credit facilities, as well as expanded facilities currently being discussed.
Oceaneering projects this acquisition would generate approximately $70 million in revenues; $10 to $12 million of operating income, after an estimated $10 million of depreciation and amortization expense; and be $0.15 accretive to earnings per share (EPS) on an annualized basis in 2004. Actual results will be impacted by the date the transaction closes. In 2005 Oceaneering projects the EPS accretion to be in the range of $0.20 to $0.25.
John Huff, Chairman and Chief Executive Officer, stated, "We are extremely pleased to have reached a conditional agreement with Subsea 7 to acquire an exceptional operation. We look forward to integrating these assets and talented individuals into our existing ROV organization and increasing Oceaneering's international business exposure to deepwater exploration, development, and production activities.
"The pending acquisition of these ROVs and related tooling engineering capabilities will substantially enhance our existing worldwide market leadership position in providing oilfield ROV services. Our oilfield work class ROV fleet size will increase by 40%, from 125 to 179 vehicles."
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