Ensco PLC shares dropped 5% in pre-market trade Tuesday after the company said that it plans to buy Atwood Oceanics Inc. in an all-stock deal, with the combined company valued at $6.9 billion. Atwood Oceanics shares skyrocketed 21% in pre-market trade. Under the deal, which could close as soon as the third quarter, Atwood shareholders will receive 1.6 shares of Ensco, valued at $10.72 per Atwood share. Both companies are offshore drillers, and the deal will "strengthen Ensco's position as the leading offshore driller with exposure to deep- and shallow-water markets that span six continents," Ensco said. Ensco expects annual expense savings of $65 million in full year 2019 and beyond, and 2018 cost synergies are expected to be more than $45 million. Ensco shares have plummeted 31.2% over the last three months, and Atwood Oceanics shares have dropped 23.1%, compared with a 2.2% rise in the S&P 500 .
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