Pride International (NYSE:PDE) Soars on Ensco (NYSE:ESV) Acquisition

On the announcement that Ensco (NYSE:ESV) was going to acquire Pride International (NYSE:PDE) for $7.3 billion, shares of Pride surged by over 16 percent on the news, although Ensco pulled back.

Once the deal is completed the new company will be the second-largest off-shore drilling company in the world, valued at over $16 billion. The combined company will include 74 rigs.

Ensco Chief Executive Officer Dan Rabun said in a statement, "The combination is an ideal strategic fit, as our rig types, markets, customers and expertise complement each other with minimal overlap."

The offer by Ensco values Pride International at $41.60, a premium of 21 percent over its Friday close.

Terms of the deal will be cash and shares, whereby shareholders in Pride will receive 0.4778 newly issued shares of Ensco, plus $15.60 in cash for each share of Pride common stock.

Ensco shareholders will have a stake of about 62 percent in the combined company and Pride shareholders close to 38 percent. The deal could close in the second quarter.

The company will be named Ensco after the deal is closed.

Pride was trading at $39.87, gaining $5.48, or 15.93 percent, as of 11:28 AM EST. Ensco was trading at $52.00, down 2.41, or 4.43 percent.