HOUSTON – In May, two offshore drilling companies entered into a merger agreement, but a shareholder is not happy about it and filed a class action lawsuit in the Houston Division of the Southern District of Texas on June 30.

The plaintiff in the case, Mary Carter, who filed individually and on behalf of all others similarly situated, alleges the Atwood Oceanics Inc., Robert J. Saltiel, George Dotson, Jack Golden,  Hans Helmerich, Jeffrey A. Miller, James Montague and Phil D. Wedemeyer violated certain portions of the Securities Exchange Act of 1934.

According to a court document, Atwood Oceanics and Ensco entered into a merger agreement on May 29, which was approved by the company’s board of directors.

The agreement called for Atwood shareholders to receive 1.60 shares of Ensco for each share of Atwood common stock for a total value of $10.72 per Atwood share based on Ensco’s closing share price of $6.70 on May 26, the suit states.

According to the suit, Atwood released a press released that stated "This represents a premium of approximately 33 percent to Atwood’s closing price on the same date. Upon close of the transaction, Ensco and Atwood shareholders will own approximately 69 percent and 31 percent, respectively, of the outstanding shares of Ensco plc. There are no financing conditions for this transaction. Ensco expects to realize annual pre-tax expense synergies of approximately $65 million for full year 2019 and beyond."

The suit was filed June 30, but two weeks prior, the Atwood board tried to convince its shareholders to vote in favor of the merger by allegedly filing "a materially incomplete and misleading Preliminary Joint Proxy Statement with the Securities and Exchange Commission, in violation of Sections 14(a) and 20(a) of the Exchange Act," the complaint said.

The complaint says the defendants failed to disclose information for shareholders to determine the fairness of the proposed merger and they claim that certain statements in the proxy are misleading.

The defendants claim the proxy contains misleading information concerning the financial projections for Atwood and Ensco and they also question the valuation analyses that was performed by Goldman Sachs.

The complaint said, "it is imperative that the material information that has been omitted from the proxy is disclosed to the company’s shareholders prior to the forthcoming shareholder vote, so that they can properly exercise their corporate suffrage rights."

As far as relief is concerned, the plaintiff wants to be certified as a class representative and the action should be maintainable as a class action.

The plaintiff wants the vote postponed until Atwood discloses the information brought in the suit that was allegedly omitted in the proxy. The plaintiff also wants damages, costs and attorney fees sustained as a result of the defendants’ actions.

The plaintiff is represented by Faruqi and Faruqi of New York and the Kendall Law Group of Dallas.

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Houston Division of the Southern District of Texas

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