The U.K.-based Ensco International plc. (ESV) is trying to win just over 50% control of Scorpion Offshore Ltd. through its wholly owned subsidiary, Ensco (Bermuda) Limited.
For this, Ensco has started a partial tender offer to buy 19% of Scorpion at NOK39.50 ($6.1) per share. This is above the previous tender offer of NOK36 ($5.6) by Seadrill, Norway, which currently owns 40% of Scorpion’s outstanding shares.
Ensco said that, upon a successful completion, it had the option to purchase 31% of Scorpion at the same price. Ensco got all the necessary permission from Scorpion directors and shareholders for the offer. If the tender offer is not successful, Ensco will not take any further steps to acquire Scorpion.
Financial discipline has made Ensco one of the best capitalized companies in the industry. Though Ensco is facing immense competition from its peers, we believe that the company is well positioned with an organically growing asset base (four ultra deepwater rigs under construction) and solid balance sheet ($1.2 billion in cash and a debt-to-capitalization ratio of 4.6% at the end of the first quarter).
Following the acquisition, Ensco will have a fleet from Scorpion including seven newbuild high-specification jack-ups. Given the signs of improvement in demand for high-specification jack-ups and Ensco’s fleet composition, we believe that the acquisition will benefit Ensco in the long run.
Read the full analyst report on “ESV”
Zacks Investment Research
