Monday, August 21 2000

Massive offshore drilling merger
Transocean Sedco Forex Inc. has signed a definitive agreement to acquire R&B Falcon Corporation in an all stock transaction. The merger will create the world's largest offshore drilling contractor.

Victor E. Grijalva, Chairman of the Board of Transocean Sedco Forex Inc., said, " R&B Falcon's 139 mobile offshore drilling units and marine barges complement the 72-rig Transocean Sedco Forex offshore fleet of modern, versatile and geographically diverse rigs, while offering a unique balance given R&B Falcon's strong position in the shallow-water U.S. Gulf of Mexico."
"Both companies," he noted, "have utilized their strong technological expertise to design and manage the construction of 17 new mobile offshore drilling units, all of which are expected to be delivered by the end of the first quarter of 2001. Delivery of these rigs will complete the combined company's newbuild capital expansion program which has been the largest in the industry's history and will add exciting new capabilities to our fleet."

The merged company will become the third-largest oil services company in the world, with an equity market capitalization of $17.7 billion, based on last Friday's Transocean Sedco Forex closing share price of $57.69.

Under the terms of the definitive agreement,p unanimously aproved by both boards, common stockholders of R&B Falcon will get 0.5 shares of newly issued Transocean Sedco Forex ordinary shares for each R&B Falcon share, resulting in the distribution of an estimated 100 million shares. Based on last Friday's Transocean Sedco Forex closing price, the newly issued shares would have a value of approximately $5.8 billion, which together with R&B Falcon's approximately $3.0 billion of debt, results in a total transaction value of an estimated $8.8 billion. The transaction is expected to be tax-free to R&B Falcon shareholders.

Closing of the transaction is expected to occur by the end of the first quarter of 2001. After the close, the combined company will be called Transocean Sedco Forex Inc. and will trade on the New York Stock Exchange under the symbol "RIG." Principal offices will remain in Houston, Texas, and the company will employ approximately 15,000 people worldwide.

Victor E. Grijalva and J. Michael Talbert will continue to serve as Transocean Sedco Forex's Chairman of the Board of Directors and President and Chief Executive Officer, respectively. No personnel changes are anticipated in other Transocean Sedco Forex senior management positions. The company will seek shareholder approval to increase the board of directors from 12 to 13 members which will be comprised of the 10 current members from Transocean Sedco Forex plus three new directors designated by R&B Falcon.


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