Scorpion Brings Possible Trading Profits for Seadrill

By Travis Johnson, Stock Gumshoe, June 19, 2008

It looks like the fight over Scorpion offshore, a small company (about $800 million) that has been subject of a minor skirmish between Seadrill and FSEM (a UAE private equity fund), may soon come to a head.

Short history: FSEM made a takeover offer for Scorpion, which like Seadrill is Oslo-listed, several months ago at 80 crowns. Seadrill effectively blocked that offer by building up its stake to 36% and making a tender offer at similar terms for the rest of the shares, also at 80 crowns.

Now, FSEM has apparently let it be known that they really want Scorpion, and will raise the bid. I don’t expect Seadrill to get into a bidding war, since they’ve said before that they would prefer placing new orders over acquiring other companies at too big a premium, but they still have a large ownership stake and should get a nice little profits if a deal at a higher price goes through.

This remains one of the ways Fredriksen’s folks will add value for Seadrill owners — they will return capital after sale/leasebacks with large dividends over the coming couple years, and they will continue to be savvy players in the consolidation of the industry, not always coming up with new acquisitions but often being a player — and a profitable one — in deals that are made by others. Should be a fun couple years!

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