News Release
FOR RELEASE: August 21, 2000
Transocean Sedco Forex Inc. Analyst Contact: Jeffrey L. Chastain
713 232 7551
Transocean Sedco Forex Inc. Media Contact: Guy A. Cantwell
713 232 7647
R&B Falcon Corporation Contact: Charles R. Ofner
281 496 5000
TRANSOCEAN SEDCO FOREX SIGNS DEFINITIVE AGREEMENT
TO ACQUIRE R&B FALCON CORPORATION
HOUSTON--Transocean Sedco Forex Inc. (NYSE: RIG) today announced
that it has signed a definitive agreement to acquire R&B Falcon Corporation
(NYSE: FLC) in an all stock transaction that will produce the industry's
largest offshore drilling contractor. The company will become the
third-largest oil services company in the world, with an equity market
capitalization of $17.7 billion, based on last Friday's Transocean Sedco Forex
closing share price of $57.69. The transaction is expected to be immediately
accretive to Transocean Sedco Forex's cash flow, while modestly dilutive to
earnings per share in 2001, and accretive thereafter. On a cash earnings
basis, the transaction is expected to be accretive immediately.
Under the terms of the definitive agreement, unanimously approved by
the board of directors of both companies, common stockholders of R&B Falcon
will receive a fixed ratio of 0.5 shares of newly issued Transocean Sedco
Forex ordinary shares for each R&B Falcon share, resulting in the distribution
of an estimated 100 million shares. Based on last Friday's Transocean Sedco
Forex closing price, the newly issued shares would have a value of
approximately $5.8 billion, which together with R&B Falcon's approximately
$3.0 billion of debt, results in a total transaction value of an estimated
$8.8 billion. The transaction will be accounted for using the purchase method
of accounting and is expected to be tax-free to R&B Falcon shareholders.
Closing of the transaction is expected to occur by the end of the
first quarter of 2001, subject to the approval of stockholders from both
companies, certain regulatory approvals and other closing conditions. After
the close, the combined company will be called Transocean Sedco Forex Inc. and
will trade on the New York Stock Exchange under the symbol "RIG." Principal
offices will remain in Houston, Texas, and the company will employ
approximately 15,000 people worldwide.
Victor E. Grijalva and J. Michael Talbert will continue to serve as
Transocean Sedco Forex's Chairman of the Board of Directors and President and
Chief Executive Officer, respectively. No personnel changes are anticipated in
other Transocean Sedco Forex senior management positions. The company will
seek shareholder approval to increase the board of directors from 12 to 13
members which will be comprised of
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the 10 current members from Transocean Sedco Forex plus three new directors
designated by R&B Falcon.
Victor E. Grijalva, Chairman of the Board of Directors of Transocean
Sedco Forex Inc., said, "The acquisition of R&B Falcon creates a new offshore
drilling company that is a worldwide leader, providing compelling benefits to
customers, stockholders and employees alike. R&B Falcon's 139 mobile offshore
drilling units and marine barges complement the 72-rig Transocean Sedco Forex
offshore fleet of modern, versatile and geographically diverse rigs, while
offering a unique balance given R&B Falcon's strong position in the
shallow-water U.S. Gulf of Mexico."
"Both companies have utilized their strong technological expertise
to design and manage the construction of 17 new mobile offshore drilling
units, all of which are expected to be delivered by the end of the first
quarter of 2001. Delivery of these rigs will complete the combined company's
newbuild capital expansion program which has been the largest in the
industry's history and will add exciting new capabilities to our fleet."
Paul B. Loyd, Jr., Chairman of the Board of Directors and Chief
Executive Officer of R&B Falcon Corporation said, "Indeed this transaction
clearly creates the world's premier offshore drilling company and enhances R&B
Falcon's shareholder value substantially. The combined company will be better
able to meet our customer's needs in the growing deepwater and domestic
natural gas segments. I firmly believe R&B Falcon's outstanding fleet,
professional rig crews and support staff will be invaluable in creating one of
the world's largest and most capable oil service companies. Integration of the
fleets should proceed smoothly as both companies share a commitment to
excellence in operations, engineering, safety and the environment and customer
service. The new company, with its leading edge equipment, geographical and
fleet diversification, outstanding personnel and financial strength will, in
my view, become the best positioned company in the oil service sector."
J. Michael Talbert, President and Chief Executive Officer of
Transocean Sedco Forex Inc., stated, "Over the past several years, our company
has employed a business strategy that has allowed us to capitalize on several
opportunities that have driven our rapid growth since 1996. Most recently, our
December 1999 merger with Sedco Forex Holdings Limited provided the company
with the financial capacity to enter into this very important transaction with
R&B Falcon. The transaction fits our long-term business plan. It expands our
mobile offshore drilling fleet, enhances our infrastructure of assets,
employee and customer relationships in all of our operating regions around the
world and gives us exposure to the North American natural gas market. This
combination of factors better positons us to address the growing and
increasingly challenging offshore drilling needs of our customers, and thus
will help us achieve our goal of being the drilling contractor of choice for
customers, employees and investors."
Talbert added that following the transaction, Transocean Sedco
Forex's consolidated debt to total capitalization ratio is expected to be only
31%, up slightly from 27% at June 30, 2000.
Simmons & Company International and Goldman Sachs & Co. are serving
as the financial advisors to Transocean Sedco Forex Inc. Morgan Stanley is
serving as the financial advisor to R&B Falcon Corporation.
The senior management of Transocean Sedco Forex Inc. and R&B Falcon
Corporation will host a conference call on Monday, August 21, 2000 at 10:00 am
Eastern Time to give investors and the media further insight into today's
announcement and respond to questions. All individuals interested in
participating in the conference call should contact (1-800) 210-9006 toll free
in the US and Canada, or (1- 719) 457-2621 direct worldwide. The confirmation
code is 982990. Call approximately 15 minutes prior to the scheduled start of
the conference.
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In addition, the conference call will be accessible through a live,
listen-only broadcast over the internet and can be accessed by logging on to
the web at the following address:
http://www.videonewswire.com/TRANSOCEAN/082100/
If you are unable to participate during the live broadcast, an
archive of the call will be available at www.prnewswire.com approximately two
hours following its conclusion.
Statements regarding the consummation of the acquisition, its effect
on future earnings, cash flow or other operating results, the tax free status
of the transaction, expected closing date of the transaction, any other effect
or benefit of the transaction, market prospects, rig delivery dates, levels of
future indebtedness, and any other statements that are not historical facts,
are forward-looking statements that involve certain risks, uncertainties and
assumptions. Transocean Sedco Forex Inc. and R&B Falcon Corporation strongly
encourage readers to note that some or all of the assumptions, upon which such
forward-looking statements are based, are beyond their ability to control or
estimate precisely, and may in some cases be subject to rapid and material
changes. Such assumptions include but are not limited to costs and
difficulties related to the integration of acquired businesses, costs, delays
and other difficulties related to the merger, closing conditions not being
satisfied, general market conditions prevailing in the marine drilling
industry (including dayrates and utilization) and various other trends
affecting the marine drilling industry, operating hazards and delays, risks
associated with international operations, actions by customers and other third
parties, the future price of oil and gas, and other factors detailed in
Transocean Sedco Forex's and R&B Falcon Corporation's filings with the
Securities and Exchange Commission (SEC), which are available free of charge
on the SEC's website at www.sec.gov. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those indicated. Additional
information regarding the transaction can be found in both company's Current
Reports on Form 8-K filed on August 21, 2000.
Investors and security holders are urged to read the joint proxy
statement/prospectus regarding the business combination transaction referenced
in the foregoing information, when it becomes available, because it will
contain important information. The joint proxy statement/prospectus will be
filed with the SEC by Transocean Sedco Forex Inc. Investors and security
holders may obtain a free copy of the joint proxy statement/prospectus (when
it is available) and other documents filed by Transocean Sedco Forex Inc. with
the SEC at the SEC's web site at www.sec.gov. The joint proxy
statement/prospectus and these other documents may also be obtained for free
by directing a request to either of the following individuals:
Jeffrey L. Chastain
Director of Investor Relations and Communications
Transocean Sedco Forex Inc.
4 Greenway Plaza
Houston, Texas 77046
Phone: 713 232 7500
Fax: 713 232 7031
Charles R. Ofner
Senior Vice President
R&B Falcon Corporation
901 Threadneedle
Houston, Texas 77079
Phone: 281 496 5000
Fax: 281 597 7556
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In addition, the identity of the people who, under SEC rules, may be
considered "participants in the solicitation" of Transocean Sedco Forex
shareholders and R&B Falcon shareholders in connection with the proposed
merger, and any description of their interests, is available in an SEC filing
under Schedule 14A made by both Transocean Sedco Forex and R&B Falcon on
August 21, 2000.
Transocean Sedco Forex Inc. is the world's largest offshore drilling
contractor, with an equity market capitalization currently in excess of $12.0
billion. The company's mobile offshore drilling fleet is comprised of 72 rigs,
including six newbuilds not yet active. This modern and versatile fleet is
located in every major offshore oil and gas drilling region. Transocean Sedco
Forex Inc. specializes in technically demanding segments of the offshore
drilling business, including industry-leading positions in deepwater and harsh
environment drilling services. The company is listed on the New York Stock
Exchange under the symbol "RIG."
R&B Falcon Corporation operates the world's largest fleet of
marine-based drilling rigs servicing the international oil and gas industry.
Its fleet is composed of 139 drilling units including the industry's largest
fleets of barge and jackup rigs, and a fleet of semisubmersibles and
drillships which is among the most capable in the world. R&B Falcon also
provides turnkey and integrated services and operates mobile production units,
internationally based land rigs and an offshore towing business.
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