Offshore drilling company Ensco has signed a definitive merger agreement to acquire Atwood Oceanics.

The transaction is valued at around $839m, reported Reuters.

Under the agreement, Atwood shareholders will receive 1.60 shares of Ensco for every Atwood share for a total value of $10.72 per Atwood share based on Ensco’s closing a price of $6.70 each.

After completion of the transaction, Ensco and Atwood shareholders will own approximately 69% and 31% of the combined company respectively.

Ensco expects to realise annual pre-tax expense synergies of nearly $65m for the full year of 2019 and beyond.

Ensco CEO Carl Trowell said: “The combination of Ensco and Atwood will strengthen our position as the leader in offshore drilling across a wide range of water depths around the world, creating a broad platform that we can build upon in the future.

"This acquisition significantly enhances our high-specification floater and jackup fleets, adding technologically advanced drillships and semisubmersibles, and refreshing our premium jackup fleet to best position ourselves for the market recovery."

"This acquisition significantly enhances our high-specification floater and jackup fleets."

The combined company is estimated to have an enterprise value of $6.9bn, and around $3.7bn in revenue backlog.

After closing, it will have a fleet of 63 rigs, which includes ultra-deepwater drillships, versatile deep and mid-water semisubmersibles, as well as shallow-water jackups. 

The company will also have a customer base of 27 oil companies and independents.

Ensco will also add six ultra-deepwater floaters, including four capable drill ships along with five high-specification jackups. 

The fleet of 26 floating rigs comprises 21 ultra-deepwater drilling rigs, which can drill in water depths of 7,500m and below. The jackup fleet will also have 37 rigs.

The transaction is subject to approval by shareholders of Ensco and Atwood along with other customary closing conditions, and is expected to close by the third quarter of this year.