Seadrill Declines Ensco's Offer for Scorpion Shares

Seadrill Limited announced that its board has decided not to accept Ensco plc's conditional offer for the shares in Scorpion Offshore Ltd.

Ensco (Bermuda) Limited, a wholly owned subsidiary, on Thursday made a partial tender offer for 19% of the outstanding shares of Scorpion at a price in cash of NOK 39.50 per share. As of the close of business Thursday, Ensco stated that it had received tenders from shareholders, irrevocable pre-acceptances and conditional sales agreements from shareholders (including members of Scorpion's board and senior management and their affiliates) that together represent a total of 36% of the outstanding Scorpion shares. Ensco issued a statement early Friday indicating that NOK 39.50 is its only and final offer and that the partial tender offer expires at 5:30 p.m. Oslo time Friday.

Seadrill stated Friday morning that it was considering raising its offer price per share in order to secure more than 50 percent ownership in Scorpion. Bermuda-registered Scorpion, which is listed on the Oslo Stock Exchange, owns and operates seven jack-ups. Seadrill controls 40.01 percent of the outstanding shares equal to 35,938,903 shares. Based on the closing share price of NOK37.5 on May 26, 2010, Seadrill's holding has a gross value of some US$207 million compared to a book value of US$111 million at end of March 2010.

According to Seadrill, the strengthening in the US dollar since the original Seadrill bid of NOK36 per share was launched gives it room for an increase in the offer price. However, the financial commitments to third parties entered into by Scorpion's board subsequent to its offer reportedly reduce the value of Scorpion for Seadrill. Because it has no intention of accepting the current offer from Ensco, Seadrill encouraged other shareholders to do the same.