Ensco Plc, the U.K.-based provider of drilling services, said it will acquire Texas-based rival Pride International for $7.3 billion in a deal that will create the world's second-largest provider of drilling services behind Switzerland-based Transocean (RIG).
Ensco (ESV) said the combined company will keep the Ensco name and be based in the U.K. The combined company will be valued at $16 billion and have a total of 74 rigs, including 21 ultra-deepwater and deepwater platforms, according to the Associated Press.
Shares of Pride International (PDE) surged $5.41, or almost 16%, to $39.80 on the news on volume that was more than 16 times the daily average. The company gives Ensco exposure to the burgeoning oil markets of Brazil and West Africa, among other regions.
Under the terms of the stock and cash deal, Pride shareholders will receive 0.4778 shares of London-based Ensco, plus $15.60 in cash for each share of Pride common stock, according to the AP. The deal is expected to result in cost of savings of at least $50 million in 2012, Ensco said.