HOUSTON, Aug. 21 /PRNewswire/ -- Transocean Sedco Forex Inc. (NYSE: RIG)
today announced that it has signed a definitive agreement to acquire R&B
Falcon Corporation (NYSE: FLC) in an all stock transaction that will produce
the industry's largest offshore drilling contractor. The company will become
the third-largest oil services company in the world, with an equity market
capitalization of $17.7 billion, based on last Friday's Transocean Sedco Forex
closing share price of $57.69. The transaction is expected to be immediately
accretive to Transocean Sedco Forex's cash flow, while modestly dilutive to
earnings per share in 2001, and accretive thereafter. On a cash earnings
basis, the transaction is expected to be accretive immediately.
Under the terms of the definitive agreement, unanimously approved by the
board of directors of both companies, common stockholders of R&B Falcon will
receive a fixed ratio of 0.5 shares of newly issued Transocean Sedco Forex
ordinary shares for each R&B Falcon share, resulting in the distribution of an
estimated 100 million shares. Based on last Friday's Transocean Sedco Forex
closing price, the newly issued shares would have a value of approximately
$5.8 billion, which together with R&B Falcon's approximately $3.0 billion of
debt, results in a total transaction value of an estimated $8.8 billion. The
transaction will be accounted for using the purchase method of accounting and
is expected to be tax-free to R&B Falcon shareholders.
Closing of the transaction is expected to occur by the end of the first
quarter of 2001, subject to the approval of stockholders from both companies,
certain regulatory approvals and other closing conditions. After the close,
the combined company will be called Transocean Sedco Forex Inc. and will trade
on the New York Stock Exchange under the symbol "RIG." Principal offices will
remain in Houston, Texas, and the company will employ approximately
15,000 people worldwide.
Victor E. Grijalva and J. Michael Talbert will continue to serve as
Transocean Sedco Forex's Chairman of the Board of Directors and President and
Chief Executive Officer, respectively. No personnel changes are anticipated
in other Transocean Sedco Forex senior management positions. The company will
seek shareholder approval to increase the board of directors from 12 to
13 members which will be comprised of the 10 current members from Transocean
Sedco Forex plus three new directors designated by R&B Falcon.
Victor E. Grijalva, Chairman of the Board of Directors of Transocean Sedco
Forex Inc., said, "The acquisition of R&B Falcon creates a new offshore
drilling company that is a worldwide leader, providing compelling benefits to
customers, stockholders and employees alike. R&B Falcon's 139 mobile offshore
drilling units and marine barges complement the 72-rig Transocean Sedco Forex
offshore fleet of modern, versatile and geographically diverse rigs, while
offering a unique balance given R&B Falcon's strong position in the
shallow-water U.S. Gulf of Mexico."
"Both companies have utilized their strong technological expertise to
design and manage the construction of 17 new mobile offshore drilling units,
all of which are expected to be delivered by the end of the first quarter of
2001. Delivery of these rigs will complete the combined company's newbuild
capital expansion program which has been the largest in the industry's history
and will add exciting new capabilities to our fleet."
Paul B. Loyd, Jr., Chairman of the Board of Directors and Chief Executive
Officer of R&B Falcon Corporation said, "Indeed this transaction clearly
creates the world's premier offshore drilling company and enhances R&B
Falcon's shareholder value substantially. The combined company will be better
able to meet our customer's needs in the growing deepwater and domestic
natural gas segments. I firmly believe R&B Falcon's outstanding fleet,
professional rig crews and support staff will be invaluable in creating one of
the world's largest and most capable oil service companies. Integration of
the fleets should proceed smoothly as both companies share a commitment to
excellence in operations, engineering, safety and the environment and customer
service. The new company, with its leading edge equipment, geographical and
fleet diversification, outstanding personnel and financial strength will, in
my view, become the best positioned company in the oil service sector."
J. Michael Talbert, President and Chief Executive Officer of Transocean
Sedco Forex Inc., stated, "Over the past several years, our company has
employed a business strategy that has allowed us to capitalize on several
opportunities that have driven our rapid growth since 1996. Most recently,
our December 1999 merger with Sedco Forex Holdings Limited provided the
company with the financial capacity to enter into this very important
transaction with R&B Falcon. The transaction fits our long-term business
plan. It expands our mobile offshore drilling fleet, enhances our
infrastructure of assets, employee and customer relationships in all of our
operating regions around the world and gives us exposure to the North American
natural gas market. This combination of factors better positions us to
address the growing and increasingly challenging offshore drilling needs of
our customers, and thus will help us achieve our goal of being the drilling
contractor of choice for customers, employees and investors."
Talbert added that following the transaction, Transocean Sedco Forex's
consolidated debt to total capitalization ratio is expected to be only 31%, up
slightly from 27% at June 30, 2000.
Simmons & Company International and Goldman Sachs & Co. are serving as the
financial advisors to Transocean Sedco Forex Inc. Morgan Stanley is serving
as the financial advisor to R&B Falcon Corporation.
The senior management of Transocean Sedco Forex Inc. and R&B Falcon
Corporation will host a conference call on Monday, August 21, 2000 at 10:00 am
Eastern Time to give investors and the media further insight into today's
announcement and respond to questions. All individuals interested in
participating in the conference call should contact (1-800) 210-9006 toll free
in the US and Canada, or (1-719) 457-2621 direct worldwide. The confirmation
code is 982990. Call approximately 15 minutes prior to the scheduled start of
the conference.
In addition, the conference call will be accessible through a live,
listen-only broadcast over the internet and can be accessed by logging on to
the web at the following address:
http://www.videonewswire.com/TRANSOCEAN/082100/
If you are unable to participate during the live broadcast, an archive of
the call will be available at http://www.prnewswire.com approximately two hours
following its conclusion.
Statements regarding the consummation of the acquisition, its effect on
future earnings, cash flow or other operating results, the tax free status of
the transaction, expected closing date of the transaction, any other effect or
benefit of the transaction, market prospects, rig delivery dates, levels of
future indebtedness, and any other statements that are not historical facts,
are forward-looking statements that involve certain risks, uncertainties and
assumptions. Transocean Sedco Forex Inc. and R&B Falcon Corporation strongly
encourage readers to note that some or all of the assumptions, upon which such
forward-looking statements are based, are beyond their ability to control or
estimate precisely, and may in some cases be subject to rapid and material
changes. Such assumptions include but are not limited to costs and
difficulties related to the integration of acquired businesses, costs, delays
and other difficulties related to the merger, closing conditions not being
satisfied, general market conditions prevailing in the marine drilling
industry (including dayrates and utilization) and various other trends
affecting the marine drilling industry, operating hazards and delays, risks
associated with international operations, actions by customers and other third
parties, the future price of oil and gas, and other factors detailed in
Transocean Sedco Forex's and R&B Falcon Corporation's filings with the
Securities and Exchange Commission (SEC), which are available free of charge
on the SEC's website at http://www.sec.gov . Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those indicated. Additional
information regarding the transaction can be found in both company's Current
Reports on Form 8-K filed on August 21, 2000.
Investors and security holders are urged to read the joint proxy
statement/prospectus regarding the business combination transaction referenced
in the foregoing information, when it becomes available, because it will
contain important information. The joint proxy statement/prospectus will be
filed with the SEC by Transocean Sedco Forex Inc. Investors and security
holders may obtain a free copy of the joint proxy statement/prospectus (when
it is available) and other documents filed by Transocean Sedco Forex Inc. with
the SEC at the SEC's web site at http://www.sec.gov . The joint proxy
statement/prospectus and these other documents may also be obtained for free
by directing a request to either of the following individuals:
Jeffrey L. Chastain
Director of Investor Relations and Communications
Transocean Sedco Forex Inc.
4 Greenway Plaza
Houston, Texas 77046
Phone: 713 232 7500
Fax: 713 232 7031
Charles R. Ofner
Senior Vice President
R&B Falcon Corporation
901 Threadneedle
Houston, Texas 77079
Phone: 281 496 5000
Fax: 281 597 7556
In addition, the identity of the people who, under SEC rules, may be
considered "participants in the solicitation" of Transocean Sedco Forex
shareholders and R&B Falcon shareholders in connection with the proposed
merger, and any description of their interests, is available in an SEC filing
under Schedule 14A made by both Transocean Sedco Forex and R&B Falcon on
August 21, 2000.
Transocean Sedco Forex Inc. is the world's largest offshore drilling
contractor, with an equity market capitalization currently in excess of
$12.0 billion. The company's mobile offshore drilling fleet is comprised of
72 rigs, including six newbuilds not yet active. This modern and versatile
fleet is located in every major offshore oil and gas drilling region.
Transocean Sedco Forex Inc. specializes in technically demanding segments of
the offshore drilling business, including industry-leading positions in
deepwater and harsh environment drilling services. The company is listed on
the New York Stock Exchange under the symbol "RIG."
R&B Falcon Corporation operates the world's largest fleet of marine-based
drilling rigs servicing the international oil and gas industry. Its fleet is
composed of 139 drilling units including the industry's largest fleets of
barge and jackup rigs, and a fleet of semisubmersibles and drillships which is
among the most capable in the world. R&B Falcon also provides turnkey and
integrated services and operates mobile production units, internationally
based land rigs and an offshore towing business.
SOURCE Transocean Sedco Forex Inc.
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Related links:
http://www.deepwater.com
CONTACT:
Analysts, Jeffrey L. Chastain, 713-232-7551,
or Media, Guy A. Cantwell, 713-232-7647, both of Transocean Sedco
Forex; or Charles R. Ofner of R&B Falcon Corporation,
281-496-5000
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