Sevan Drilling Board: Seadrill’s Offer Too Low

After it was earlier today announced that one of the world’s largest drilling contractors, Seadrill Limited, had acquired 50.1 % shares in its rival Sevan Drilling, and after the company revealed it intended to acquire all of the remaining share in Sevan, the Sevan board of directors responded negatively.

In a statement issued today,  the independent (non-Seadrill related) members of the board of Sevan Drilling said that that a price of NOK 3.95 undervalues Sevan Drilling’s assets and prospects, and represents a significant discount to latest analyst consensus net asset value estimates and target prices.

“The Board further believes that the financing plan proposed by Sevan Drilling on 19 June 2013 was an attractive proposition and in the best interests of all shareholders.

The Board will revert with formal opinions on the offer and further guidance for shareholders regarding any future action in due course, once the details of Seadrill’s offer, financing solution and other propositions have been reviewed and considered. As part of its considerations in this respect, the Board will together with its advisors consider how to preserve the best interests of the company for its shareholders and other stakeholders.”

Seadrill has announced an intention to call an extraordinary shareholders meeting where it will propose a new board reflecting its new level of ownership, management arrangements and an alternative financing plan. The takeover offer for the remaining shares of Sevan Drilling is expected to be submitted within four weeks from today.

Sevan Drilling, a Norway-based drilling contractor, owns a fleet of Ultra Deepwater drilling rigs of a specific cylindrical design. The company owns 4 offshore drilling rigs, two of which are under construction in China.