Sheila McNulty Ensco/Pride deal gets messy

The Ensco deal to buy Pride International looks like it is going to get a bit messy. A class-action lawsuit has been filed on behalf of shareholders in Pride International to stop what it alleges is an unfairly priced merger with Ensco, the UK-based drilling services company.

The lawsuit also alleges Pride’s directors breached their fiduciary duty to shareholders by agreeing to a low share price and a restrictive merger contract that would preclude considering other offers. From the filing:

Even if the Pride Board receives an intervening bid that appears to be superior to Ensco’s offer, they are precluded from even entering into an alternate agreement. This provision prevents the Pride board from exercising their fiduciary duties and precludes an investigation into competing proposals.

Pride is declining to comment. And Ensco has yet to return calls. But one could assume they are pretty busy.

There are indications that SeaDrill, a Norwegian drilling contractor that owns 9.4 per cent of Pride, might get involved on some level, as well.

Hilde Waaler, spokeswoman for SeaDrill, said the company had had “discussions” about whether to make its own bid for Pride. But it is now focused on responding to it Ensco’s bid. When asked if that response would be as a bidder or shareholder, her answer left open some room for interpretation:

Depends on what we’ll finally decide to do. We just learned about the offer. Hence we need to analyse the offer and conclude only thereafter.

This looks like one of those deals that we are going to hear a lot more about.