By Lisa Kerner
Charlotte, N.C., March 19 - Hercules Offshore, Inc. entered into a definitive merger agreement to acquire 100% of the outstanding stock of Todco in a stock and cash transaction valued at approximately $2.3 billion, according to a news release.
Todco shareholders will receive an average total consideration equal to 0.979 shares of Hercules Offshore and $16.00 in cash for each share of Todco common stock outstanding, or an estimated 56.9 million shares of Hercules Offshore and cash of $930.7 million.
Hercules Offshore said it will fund its acquisition through existing cash on hand and through a senior secured term loan facility underwritten by UBS Investment Bank.
Todco shareholders will own approximately 64% of the combined company, and Hercules Offshore shareholders will own about 36%. The boards of both companies have unanimously approved the transaction, which is slated to close in mid-2007.
"We intend to leverage the strong organizations of both Hercules Offshore and Todco to create long-term value for our companies' shareholders, customers and over 3,900 employees," Hercules Offshore president and chief executive officer Randy Stilley said in the release.
"Looking forward, Hercules Offshore will continue to focus on seeking strategic growth opportunities, expanding our geographic diversity and maintaining our status as a low-cost provider, while preserving our conservative and disciplined financial management."
Stilley will continue to lead the Hercules Offshore senior management team, and three Todco directors will join the Hercules Offshore board of directors.
Houston-based Hercules Offshore operates a fleet of nine jackup oil and gas drilling rigs and 64 liftboats.
Todco, also based in Houston, provides contract oil and gas drilling services.
| Acquirer: | Hercules Offshore, Inc.
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| Target: | Todco
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| Transaction value: | $2.3 billion
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| Payment per share: | $16.00 per share cash plus 0.979 shares of Hercules Offshore stock
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| Announcement date: | March 19
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| Expected closing: | Mid-2007
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| Stock price for acquirer: | Nasdaq: HERO; $26.57 on March 16
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| Stock price for target: | NYSE: THE; $32.78 on March 16
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