British firm Ensco has signed a definitive merger agreement with US-based Rowan Companies to create a significant offshore drilling company with a broad portfolio of high-specification floaters and jack-ups.

The transaction represents an estimated enterprise value of $12bn and combined liquidity of $3.9bn.

Under the agreement, Ensco will offer 2.215 additional shares to Rowan shareholders for each Rowan share held by them.

Upon completion, Ensco shareholders will hold around 60.5% interest of the combined company, while Rowan shareholders will own the remaining 39.5%.

The merger is expected to offer annual pre-tax expense synergies of around $150m. Ensco expects the transaction to be accretive to cash flow per share in 2020.

Rowan Companies president and CEO Tom Burke said: “We are excited to reach an agreement to combine our well-respected organisations, enabling both Rowan and Ensco shareholders to participate in the substantial value creation opportunities of a larger, more technologically-advanced and diverse offshore drilling company.

"The combined entity will have a rig fleet of 28 floaters and 54 jack-ups."

“By merging our high-quality rig fleets and infrastructure covering the world’s most prolific offshore basins, we increase our scale while maintaining a shared focus on high-specification assets that will include ultra-deepwater drillships and versatile semisubmersibles, as well as harsh environment and modern jack-ups.”

The combined entity will have a rig fleet of 28 floaters and 54 jack-ups. It will have greater geographical diversity with operations in several regions, including the Gulf of Mexico, Brazil, West Africa, North Sea, Mediterranean, Middle East, Southeast Asia, and Australia.

Through the merger deal, Ensco intends to benefit from Rowan’s strategic joint venture (JV) with Saudi Aramco. Rowan holds a 50% interest in offshore drilling rigs operator ARO Drilling in the JV with Saudi Aramco.

Ensco president and CEO Carl Trowell said: “The combination of Ensco and Rowan will create an industry leader in offshore drilling across all water depths, with significant advantages to capitalise on future opportunities and better serve our customers.”

Set for completion by mid-2019, the transaction is conditional on the satisfaction of certain conditions, including shareholder and regulatory approvals.