UPDATE 2-Ensco bids for Scorpion, trumps Seadrill offer

* Starts partial tender offer for 19 pct of Scorpion shares

* Has options to buy another 31 percent of Scorpion

* Recommended bid of 39.50 crowns/share expires on Friday

* Seadrill had offered 36 crowns

* Seadrill shares shares drop; Scorpion up 7.7 pct

(Adds background, shares)

By Richard Solem and Camilla Bergsli

OSLO, May 27 (BestGrowthStock) – U.S. oil and gas drilling
contractor Ensco International (ESV.N: ) launched a recommended
tender offer aimed at winning control of Scorpion Offshore
(SCORE.OL: ), trumping an earlier bid from Seadrill (SDRL.OL: ).
Ensco, the fourth-largest U.S.-listed rig contractor, said
on Thursday it was offering to buy 19 percent of Scorpion at
39.50 crowns per share, valuing the company at $546 million.

Ensco also said it had options to buy 31 percent of Scorpion
at the same price, meaning a successful tender would give it
control over 50 percent of the company, at which point it might
act to buy the remaining shares at 39.50 crowns.

Scorpion shares were up 7.7 pct at 40.40 crowns at 1331 GMT,
suggesting investors thought a higher offer may emerge.

“We see a 50 percent chance that Seadrill will make a
counter-offer,” one trader said, adding that the recent market
turmoil had made shares in Scorpion’s peers relatively cheaper.

Earlier this month, Seadrill, controlled by Norwegian
shipping tycoon John Fredriksen and which already owns more than
40 percent of Scorpion, launched an offer of 36 crowns per
share, with the world’s No.2 deepwater-driller saying it wanted
to try to get to 100 percent in Scorpion. [ID:nN15244177]

Seadrill shares were down 5.2 pct to 138.70 crowns versus a
1.06 percent rise on Oslo’s benchmark index (.OSEBX: ) after Ensco
launched its rival bid for Scorpion. Seadrill also posted
lower-than-expected first-quarter profit (Read more your timing to make a profit.)s [ID:nLDE64P1P9]

Seadrill chief executive Alf Thorkildsen would not comment
on Thursday on the potential for it to raise its bid. “I’ve just
received this news,” he told Reuters, adding it was natural that
Scorpion would attract interest.

Scorpion shareholders, including members of senior
management and directors, representing 31.2 percent of the
shares said they would accept a full offer, if made by Ensco,
and granted it an option to buy their shares at 39.50 crowns.

Seadrill is chaired by John Fredriksen, a billionaire known
as “Big Wolf” in Norway, who bankers deem more a financier than
an oilman.

While oilfield services deals have hogged much of the
attention in the past few quarters, bankers and investors are
increasingly scanning the M&A horizon for offshore drilling rigs
as that industry steadily pulls out of a slump. [ID:nN01243805]

Seadrill shares are down 14 percent from a 2010 peak hit in
April. It raised about $322 million in a private placement in
April to finance the offer for Scorpion.

Seadrill also last month gave a $240 million loan to
Scorpion, which has seven so-called ultra premium jack-up rigs,
that operate on water depths less than 300 feet.

Seadrill said in its quarterly report it was optimistic
about the outlook for modern jack-up rigs after it had
experienced an uptick in demand on the back of higher oil
prices.

“Although our latest investments have been in jack-up rigs,
our main focus continues to be to develop the world’s leading
fleet of modern deepwater floater assets,” Seadrill said.

Stock Investing

(Editing by Dan Lalor and Hans Peters)

UPDATE 2-Ensco bids for Scorpion, trumps Seadrill offer