Transocean Inc. and GlobalSantaFe Corporation announced that their boards of directors have unanimously approved a definitive agreement for a merger of equals. Based upon closing prices for each company's ordinary shares as of July 20, 2007, the estimated enterprise value of the combined company would be approximately $53 billion. The combined company, to be known as Transocean Inc., will retain principal offices in Houston and trade on the New York Stock Exchange with the symbol RIG.
Under the terms of the agreement, Transocean shareholders will receive $33.03 in cash and 0.6996 shares of the combined company for each share of Transocean they own. GlobalSantaFe shareholders will receive $22.46 in cash and 0.4757 shares of the combined company for each share of GlobalSantaFe they own. The total number of shares outstanding of the combined company after the transaction will be approximately 318 million shares.
The combined current revenue backlog of $33 billion, together with the greater financial strength of the combined company, will enable a $15 billion recapitalization while retaining the financial flexibility to invest for future growth. Financing by affiliates of Goldman, Sachs & Co. and Lehman Brothers Inc. will provide for shareholders of both companies to receive an aggregate payment of $15 billion in cash. The combined company intends to dedicate its first two years of free cash flow to reducing debt.
The combination will create an organization with approximately 20,000 personnel, providing a full range of offshore drilling services in the world's key regions.