In the last trading session, the stock price of ENSCO PLC (NYSE:ESV) declined more than 5% to close the day at $5.22. More recently, Arrowgrass Capital Partners (US) LP had sent an open letter to the company’s shareholders urging them to vote against company’s anticipated merger deal with Atwood Oceanics, Inc.
The letter mentioned that the opportunity to vote on the anticipated Atwood deal at the October 5, 2017 meeting is quickly coming. Market and industry events have deepened their conviction that this merger destroys value for Ensco shareholders as it is the wrong merger at the wrong time and the wrong price. Therefore, they urge fellow shareholders to not cast vote in the favor of the deal directly on Ensco’s proxy card.
Investors needing assistance with voting with questions should contact Morrow Sodali, which is helping Arrowgrass. The entity offer access to their materials opposing this deal, which have initially been submitted with the Securities and Exchange Commission and are available at www.sec.gov. Fellow shareholders should feel authorized to save Ensco from this poor deal.
Arrowgrass has been in against of this Atwood merger for numerous reasons. It believes that even based on management’s estimates, this deal is dilutive on all applicable metrics. The proposed Ensco and Atwood stock exchange ratio shows an unjustifiable premium. Moreover, this merger comes at a time when Atwood faces a liquidity barrier while burning cash and there exists no urgency to bail them out at a big premium. This merger also inappropriately heightens risk by shortening runway and flagging the balance sheet, while giving away considerable upside in a recovery. Ensco is not just acquiring assets, but it is also offering stock on unacceptable terms.
Ensco management has taken immense pains to contend that they are purchasing high-quality, desirable assets at a suitable price, but ignores the query on which they are actually voting, and that is issuing shares.