Santa Fe to buy Global Marine for 17% PremiumWho said M&A was dead?
https://cbs.marketwatch.com/tools/quotes/newsarticle.asp?siteid=mktw&sid=2201&guid=%7B73816F49%2DA9C2%2D44FA%2DBA27%2DD59AF114489E%7D
From Reuters
UPDATE 1-Santa Fe to buy Global Marine in $3 bln stock deal
9/3/2001 9:45:00 PM
09-03 0608 UPDATE 1-Santa Fe to buy Global Marine in $3 bln stock deal (Adds details and company comments throughout, adds byline)
By Tom Johnson
NEW YORK, Sept 3 (Reuters) - Santa Fe International Corp. (SDC) on Monday said it agreed to buy rival Global Marine Inc. (GLM) in a nearly $3 billion stock-swap deal, creating the world's second-largest offshore driller of oil and natural gas.
The transaction -- described as a merger of equals by both companies -- comes amid a growing consolidation wave among offshore drilling contractors looking to achieve size and scale to keep pace with the demands of their increasingly large customers.
"All of our customers are increasingly looking for worldwide drilling abilities," said Sted Gerber, Santa Fe's president and chief executive officer, who will serve in similar positions with the new company. "This merger gives us the ability to serve any size of market and the equipment needed to support our customers anywhere in the world."
The new company, which will be called GlobalSantaFe Corp., will rank in size -- among the world's offshore oil and gas drillers -- only behind Houston's Transocean Sedco Forex Inc. (RIG) , formed earlier this year through the merger of Transocean and R&B Falcon.
GlobalSantaFe Corp. will have a market value of about $6 billion, based on Friday's closing stock prices. The new company will operate more than 100 drilling rigs worldwide.
Terms of the transaction call for Global Marine shareholders to swap each share they own for 0.665 shares in the new company, called GlobalSantaFe, which will be based in Houston, where Global Marine is currently headquartered. That ratio values Global Marine shares at $16.83 per share, or a nearly 17 percent premium to the company's closing price of $14.40 on Friday.
Santa Fe is technically the acquiring company since its shareholders will swap each share they own for one share in the new company. However, Global Marine shareholders will ultimately own a 50.6 percent stake in GlobalSanteFe, while Santa Fe shareholders will own 49.4 percent.
The transaction, which the companies anticipate closing by the end of this year, will add mildly to the new company's earnings during 2002, but substantially increase GlobalSantaFe's cash flow during the same year, the companies said. The firms anticipate generating cost and operating synergies of about $25 million by the end of next year.
Global Marine Chairman and CEO Bob Rose will serve as chairman of the combined entity, with the 14-member board being equally split among Global Marine and Santa Fe representatives.
The two companies, combined, generated more than $2 billion during the year ended June 30, 2001. But both have seen their stock prices hammered amid a turbulent market for energy prices.
On Friday, Santa Fe shares closed up 28 cents Friday to $25.30 on the New York Stock Exchange, but remain more than 41 percent off their 52-week high of $43.94. Global Marine, meanwhile, has fared even worse, on Friday closing up 21 cents at $14.40, nearly 58 percent off its 52-week high of $34.25.
Gerber said he anticipated the transaction would create "tremendous institutional investor interest" in the new company, whose worldwide presence and market capitalization would be nearly unmatched among industry competitors.
Kuwait Petroleum Corp., which owns a nearly 38 percent stake in Santa Fe through a wholly owned subsidiary, has agreed to support the transaction and will own an 18.7 percent stake in GlobalSantaFe, the companies said.
REUTERS
Rtr 21:45 09-03-01 Copyright 2001, Reuters News Service