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By John Benny
Oct 8 (Reuters) - Deep-sea oil driller Ensco Plc said on Monday it would buy smaller rival Rowan Cos Plc in an all-stock deal valued at $2.38 billion, as it looks to increase its rig count and benefit from Rowan's joint venture with Saudi Aramco.
The deal adds to a wave of consolidation by drillers over the past year as oil prices rise and operators seek to buy and put to work new higher-spec rigs now that the prices they can charge seem to have bottomed out.
Ensco said it expected to benefit from Rowan's 50 percent share in the ARO Drilling partnership with Aramco in Saudi Arabia as well as gain a presence in Norway and in harsh environment markets.
The Rowan deal is Ensco's second since OPEC-led efforts boosted oil prices in the second half of 2016. Ensco bought rival Atwood Oceanics last year.
"ESV will now gain exposure to the ultra-harsh jackup market, which is a market that is quickly beginning to tighten, and double-down on its already robust market share position with Saudi Aramco via addition of RDC's ARO Drilling JV," Tudor Pickering Holt & Co analysts said.
The combined entity will have an enterprise value of about $12 billion and will own a fleet of 28 floating rigs and 54 jack-ups, with drilling operations in the Gulf of Mexico, Brazil and West Africa, among others.
Offshore drillers, worst hit during the 2014 slide in oil prices, have largely trailed their peers in the U.S. shale industry.
However, they are now using deal making to increase their bargaining power in the face of persistently low day rates and over capacity.
Transocean Ltd, one of the world's largest offshore drilling contractors, recently agreed to buy deep water expert Ocean Rig UAW for $2.7 billion.
Rowan shareholders will receive 2.215 Ensco shares for each share. That translates to $18.78 per share and does not offer any premium to Rowan's Friday close. Rowan's shares were up 2.8 percent premarket.
Ensco shareholders will own 60.5 percent of the combined company, with Rowan shareholder's owning the rest. The deal is expected to close in the first half of 2019. (Reporting by Shanti S Nair in Bengaluru; Editing by Shounak Dasgupta and Anil D'Silva)