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Ensco Proposes To Increase Exchange Ratio For Rowan Companies Merger

Ensco plc (ESV) said that it has made a proposal to Rowan Companies plc (RDC) to increase the exchange ratio for its all-stock combination with Rowan.

As per the terms of the proposal, Rowan shareholders would receive 2.600 Ensco shares for each Rowan share, a 17.4% increase from the exchange ratio of 2.215 contemplated by the transaction agreement dated October 7, 2018 between the parties.

Upon closing, Ensco and Rowan shareholders would own approximately 57% and 43%, respectively, of the outstanding shares of the combined company. All other terms and conditions of the transaction agreement would remain unchanged. The proposal has been unanimously approved by Ensco's board of directors.

As a result of significant synergies, the transaction is expected to be accretive to cash flow per share in 2020. The combined company would also have a strong financial position with $3.7 billion of total liquidity, $2.6 billion of contracted revenue backlog and an enhanced credit profile that enables the combined company to better compete across market cycles.

Ensco said it is committed to the combination of the two companies. However, this proposal is final and represents the maximum exchange ratio that Ensco is prepared to offer.

Separately, Rowan Companies confirmed receipt of a proposal from Ensco to increase the exchange ratio for all-stock transaction in which Rowan would combine with Ensco. Under the terms of the proposal, Rowan shareholders would receive 2.60 shares of Ensco for each share of Rowan, which represents an approximately 17.4% increase compared to the 2.215 exchange ratio contemplated under the definitive transaction agreement entered into on October 7, 2018.

Rowan noted that its board will carefully review and consider Ensco's proposal to determine the course of action that the Board believes is in the best interest of Rowan and its shareholders. The Rowan Board will respond to Ensco's proposal in due course following its review.

Earlier today, Canyon Capital Advisors LLC , the investment advisor to funds and accounts that hold over 8 million shares, or approximately 6.3%, of the outstanding ordinary shares of Rowan Companies plc , issued the statement welcoming the recommendation from Institutional Shareholder Services or "ISS" that shareholders vote against the proposed merger between Rowan and Ensco plc

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