Under the agreement, Pride shareholders will receive 0.4778 Ensco shares plus $15.60 in cash – which amounts $41.60 – for each Pride common share.

After the transaction, Ensco shareholders will own an estimated 62% interest in the combined company, while Pride shareholders will own the remaining 38% interest.

The estimated enterprise value of the combined company is $16bn, the estimated revenue backlog for the company is approximately $10bn, and can realize annual pre-tax expense synergies of at least $50m for 2012 and beyond, Ensco said.

Ensco claims that the transaction will result in the second largest offshore driller in the world with 74 rigs, 21 ultra-deepwater and deepwater rigs, and more active jackup rigs than any other driller.

The combined company will retain the name Ensco, and will remain domiciled in the UK, and the current Ensco chairman, president and CEO Dan Rabun will be the chairman, president and CEO of the combined company.

The transaction is subject to approval by the shareholders of Ensco and Pride, and the two companies expect that the transaction could close as soon as the second quarter of 2011.