Transocean denies R&B merger speculation

Talk is flying in the offshore drilling rig industry of a possible merger between two major international players - Transocean of Norway and Houston-based Reading & Bates (R&B) - but Transocean's boss denies negotiations have taken place. "There are no such discussions underway with Reading & Bates," insists Transocean president Reidar Lund. He dismisses reports of high-level talks between the two groups as incorrect speculation. Merger prospects R&B vice president and chief financial officer Tim Nagle declines to comment on the matter, but does indicate that R&B is in general actively pursuing further rationalization in the rig business. "We are interested in discussions with industry players," Nagle says. He adds that a prerequisite for any future mergers or acquisitions involving R&B would be an improvement in the company's value for shareholders. Lund, meanwhile, does not rule out prospects for linking with a US-based rival. "It's up to our owners to determine if mergers or acquisitions are of interest," he comments. Wise move Lund says Transocean's strategic expansion in recent years - which included acquiring Norwegian rig owners Ross Offshore and Wilrig - has proven to be a wise move. Lund says further rationalization is necessary in the rig industry, adding that Transocean will continue to play "a pro-active role in this direction." Analysts deem Transocean ripe for takeover attempts, as it is cash-strong and has little debt after the NOK 695.75m (USD 109.6m) sale last month of its wholly owned subsidiary Anchor Drilling Fluids to M-I Drilling Fluids LLC in Houston. Transocean stock has doubled in value from NOK 56 per share one year ago to NOK 115 this week, while R&B's stock has nearly tripled from USD 5.50 per share to USD 15.25 during the same period.