Transocean Sedco Forex reached a definitive agreement to acquireR&B Falcon Corp. in a 100% stock transaction for a total costof $8.8 billion. The transaction will result in what the companiesclaim will be the largest offshore drilling contractor.

The two Houston-based oil and gas exploration drilling andservice companies will become the third largest oil services firmin the world, with an equity market capitalization of $17.7billion. The acquisition is expected to be immediately accretive toTransocean’s cash flow.

Both boards of directors have approved a deal that would issue0.5 of a new Transocean Sedco share for each share of R&BFalcon common stock. Transocean Sedco estimates it will distribute100 million shares at a cost of $5.8 billion. The company will alsoassume $3 billion of R&B Falcon’s debt. Pending shareholdersapproval from both companies, regulatory approvals and otherconditions, Transocean Sedco hopes to have the purchase completedby the end of the first quarter of 2001.

“The acquisition of R&B Falcon creates a new offshoredrilling company that is a worldwide leader, providing compellingbenefits to customers, stockholders and employees alike,” saidVictor E. Grijalva, chairman of the board of directors ofTransocean Sedco Forex. “R&B Falcon’s 139 mobile offshoredrilling units and marine barges complement the 72-rig TransoceanSedco Forex offshore fleet of modern, versatile and geographicallydiverse rigs, while offering a unique balance given R&BFalcon’s strong position in the shallow-water U.S. Gulf of Mexico.”

The companies are now jointly building 17 new mobile offshoredrilling units which should be ready for delivery around the timethe acquisition is expected to close.

Paul B. Loyd Jr., CEO of R&B Falcon said, “Indeed thistransaction clearly creates the world’s premier offshore drillingcompany and enhances R&B Falcon’s shareholder valuesubstantially. The combined company will be better able to meet ourcustomer’s needs in the growing deepwater and domestic natural gassegments. I firmly believe R&B Falcon’s outstanding fleet,professional rig crews and support staff will be invaluable increating one of the world’s largest and most capable oil servicecompanies.”

Transocean Sedco Forex states it is the “world’s largestoffshore drilling contractor.” Its offshore drilling fleet islocated in every major offshore oil and gas drilling region with afocus on deepwater and harsh environment drilling services. R&BFalcon lays claim to operating the world’s largest fleet ofmarine-based drilling rigs servicing the international oil and gasindustry. R&B Falcon also provides turnkey and integratedservices and operates mobile production units, internationallybased land drilling rigs and an offshore towing business.

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