Baird:
Somehow, and I'm not exactly sure how, I have the impression that you are a bit bullish on Ensco. Therefore, this one's for you (from AOL):
Subject: Re: SLB and ESV..Possible ?
Date: Wed, Apr 1, 1998 21:18 EST
From: Devpuck
Message-id: <1998040202183701.VAA17597@ladder01.news.aol.com>
Low prices and a difficult environment accelerate merger activity. No one should dispute that. In my infinite wisdom, I have considered several combinations. In response to an acquisition of DO which has been rumored on this board , I doubt it unless Tisch and Co. get a hefty premium (as in very hefty) ......The price tag would be too large in my opinion for anyone except Schlumberger. The Rose departure came as an absolute shock to me however so
maybe something big is up. In any event, the most interesting combinations I have come up with is SLB and Ensco or BHI and Ensco (perhaps DO and Ensco or RIG and Ensco) . I think these propsosals are a possibility because of three reasons:
1. Ensco is a logical fit for anyone because, not only do they have premium jackups, but also, they have supply boats which would fit in with a company like Schlumberger (or Baker) both of whom are basically on record as saying they want the offshore oil patch to be a soup to nuts operation (Witness for SLB the recent Sedco deepwater announcemements and the BHI integarted solutions philosophy);
2. Ensco has so much free cash flow right now that they don't know what the hell to do with it. They are paying a dividend for God's sake (I think they should be buying back more stock but who the hell cares what I think) IMHO, they are a sitting duck for one of the big service companies (or perhaps a DO or RIG) who would love to take the opportunity to make such an acquisition and have the ability to pay down some debt over the next couple of
years, improve the bottom line, and set themselves up as less "cyclical" for the long term;
3.. Several of their premium jackups (including West Omicron recently acquired from Smedvig) are being refurbished and will be ready for 1999 so that any merger would logically show a significant contribution in 1999 and make the accretion to earnings and hence the merger itself look great in 1999 (everyone, even the investment bankers, stay fat and happy) .....Who knows though......I would love to hear opinions.......DEV.
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