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Filed by: Transocean Sedco Forex Inc.
Pursuant to Rule 425 under the Securities Act of 1933 and
deemed filed pursuant to Rule 14a-12 of
the Securities Exchange Act of 1934
Filing Company: Transocean Sedco Forex Inc.
Commission File No.: 333-75899
Subject Company: R&B Falcon Corporation
Commission File No.: 001-13729
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TRANSOCEAN SEDCO FOREX INC. ANALYST CONTACT: Jeffrey L. Chastain NEWS RELEASE
713 232 7551
TRANSOCEAN SEDCO FOREX INC. MEDIA CONTACT: Guy A. Cantwell FOR RELEASE: August 21, 2000
713 232 7647
R&B FALCON CORPORATION CONTACT: Charles R. Ofner
281 496 5000
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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 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."
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"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.
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.
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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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