UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

(RULE 14a-101)

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.  )

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ENSCO International Incorporated

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To the Stockholders of ENSCO International Incorporated:

 

You are cordially invited to the Special Meeting of Stockholders of ENSCO International Incorporated, a Delaware corporation (“Ensco Delaware”), to be held at the 5-Star Worldwide Conference Center at Lincoln Plaza, Suite B30 — Lower Level, 500 N. Akard Street, Dallas, Texas 75201, on December 22, 2009, at 10:00 a.m., Central Standard Time. Only stockholders of record at the close of business on November 16, 2009, are entitled to notice of and to vote at the special meeting. Details of the business to be presented at the special meeting can be found in the accompanying Notice of Special Meeting of Stockholders and proxy statement/prospectus.

 

At the special meeting, you will be asked to approve the adoption of an Agreement and Plan of Merger and Reorganization (the “merger agreement”) between Ensco Delaware and a wholly-owned, indirect subsidiary of Ensco Delaware, which is one of the initial steps of a proposed reorganization of the corporate structure of Ensco Delaware and the group of companies it controls (the “reorganization”). If the merger agreement is approved, we would consummate a merger the result of which is that you would hold American depositary shares (collectively, the “ADSs”), evidenced by American depositary receipts (“ADRs”), which will represent Class A Ordinary Shares of a newly formed public limited company named “Ensco International plc” or a similar name (“Ensco UK”), incorporated under English law and subject to U.K. tax laws. Ensco UK is currently a private limited company named “ENSCO International Limited.” After the completion of the merger, Ensco UK and its subsidiaries will continue to conduct the same business operations as conducted by Ensco Delaware before the transaction.

 

We currently anticipate that the effective time of the merger will be at 12:01 a.m., Eastern Standard Time, on December 23, 2009, although the merger may be abandoned by our Board at any time, including after stockholder approval.

 

We will submit an application to the New York Stock Exchange (the “NYSE”) and expect that, immediately following the effective time of the merger, the ADSs will be listed on the NYSE under the symbol “ESV,” the current symbol for Ensco Delaware common stock. We have no current plans to list ADSs (or Ensco UK’s shares) on any other securities exchange, including the London Stock Exchange. We estimate that up to 150 million ADSs representing Class A Ordinary Shares of Ensco UK will be delivered in connection with the merger and the transactions described in this proxy statement/prospectus.

 

Upon completion of the reorganization, we will remain subject to the U.S. Securities and Exchange Commission reporting requirements, the mandates of the Sarbanes-Oxley Act and the applicable corporate governance rules of the NYSE, and we will continue to report our consolidated financial results in U.S. dollars and in accordance with U.S. generally accepted accounting principles. We also must comply with any additional reporting requirements of English law.

 

Generally, for U.S. federal income tax purposes (i) stockholders of Ensco Delaware who are U.S. persons should recognize gain, if any (but not loss), as a result of the merger, and (ii) stockholders of Ensco Delaware who are not U.S. persons will not be subject to U.S. federal income tax as a result of the merger.

 

The reorganization cannot be completed unless the proposal to adopt the merger agreement is approved by the holders of a majority of Ensco Delaware’s outstanding shares entitled to vote at the special meeting. The accompanying proxy statement/prospectus contains important information about this proposal and we encourage you to read it. In particular, you should carefully consider the discussions in the sections of the proxy statement/prospectus entitled “Forward-Looking Statements” and “Risk Factors” beginning on page 18.

 

As further explained in the accompanying proxy statement/prospectus, we currently have substantial operations in the U.K. Our Board of Directors expects that the reorganization and the relocation of our principal executive offices, including most of our senior executive officers and other key decision makers, to the U.K., would, among other anticipated benefits: enhance management efficiencies resulting from the U.K. time zone overlap with geographies where we operate, improve access to key customers located in the U.K. or Western Europe or who routinely travel to the U.K., enhance our access to European institutional investors, improve the general customer and investor perception that we are an international driller with an increasing focus on deepwater operations rather than a Gulf of Mexico jackup driller, allow us to take advantage of the U.K.’s developed and favorable tax regime and extensive tax treaty network, and allow us to potentially achieve a global effective tax rate comparable to that of some of our global competitors.

 

Our Board of Directors has determined that the reorganization and the merger agreement are advisable and in the best interests of Ensco Delaware and our stockholders and, as such, has unanimously approved the reorganization and the merger agreement. The Board of Directors recommends that you vote “FOR” the proposal to adopt the merger agreement.

 

Your vote is very important, regardless of the number of shares you own. Whether or not you plan to attend the special meeting, please take the time to vote by completing and mailing the enclosed proxy card or voting instruction card and either return it in the pre-addressed envelope provided or vote through the Internet or by telephone, as soon as possible. You may revoke your proxy and vote in person if you decide to attend the special meeting.

 

Yours very truly,

Daniel W. Rabun
Chairman, President and Chief Executive Officer

 

November 20, 2009

 

Neither the U.S. Securities and Exchange Commission nor the U.K.’s Financial Services Authority (the “FSA”) has approved or disapproved of the securities to be issued in the merger or determined if this proxy statement/prospectus is truthful or complete. Any representation to the contrary is a criminal offense. For the avoidance of doubt, this proxy statement/prospectus is not intended to be and is not a prospectus for purposes of the U.K. FSA’s Prospectus Rules.

 

This proxy statement/prospectus is dated November 20, 2009, and is first being mailed to stockholders of Ensco Delaware along with a form of proxy card or voting instruction card on or about November 20, 2009.

 

 

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To Be Held On December 22, 2009

 

To the Stockholders of ENSCO International Incorporated, a Delaware corporation (“Ensco Delaware” or the “Company”):

 

Notice is hereby given that a Special Meeting of Stockholders of the Company will be held at the 5-Star Worldwide Conference Center at Lincoln Plaza, Suite B30 — Lower Level, 500 N. Akard Street, Dallas, Texas 75201, on Tuesday, December 22, 2009, at 10:00 a.m., Central Standard Time, for the following purposes:

 

1. To adopt the Agreement and Plan of Merger and Reorganization (the “merger agreement”), a copy of which is attached to the accompanying proxy statement/prospectus as Annex A, by and between Ensco Delaware and ENSCO Newcastle LLC, a newly formed Delaware limited liability company (“Ensco Mergeco”) and a wholly-owned subsidiary of ENSCO Global Limited, a newly formed Cayman Islands exempted company (“Ensco Cayman”) and a wholly-owned subsidiary of Ensco Delaware, pursuant to which Ensco Mergeco will merge (the “merger”) with and into Ensco Delaware, with Ensco Delaware surviving the merger as a wholly-owned subsidiary of Ensco Cayman. Ensco Cayman will become, in connection with the merger, a wholly-owned subsidiary of ENSCO International Limited, a newly formed private limited company incorporated under English law which, prior to the effective time of the merger, will re-register as a public limited company named “Ensco International plc” (“Ensco UK”). Pursuant to the merger agreement, each issued and outstanding share of the common stock of Ensco Delaware will be converted into the right to receive one American depositary share (collectively, the “ADSs”), which represents one Class A Ordinary Share of Ensco UK and is evidenced by an American depositary receipt (an “ADR”). Ensco UK, together with its subsidiaries, will own and continue to conduct our business in substantially the same manner as is currently being conducted by Ensco Delaware and its subsidiaries.

 

2. To approve any adjournments or postponements of the special meeting to a later date to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the adoption of the Agreement and Plan of Merger and Reorganization.

 

Stockholders will also consider and vote on such other business as may properly come before the special meeting.

 

The proposal to adopt the merger agreement is more fully described in the proxy statement/prospectus accompanying this notice.

 

Stockholders of record at the close of business on November 16, 2009 are entitled to receive notice of and to vote at the special meeting or any adjournment thereof. A list of all stockholders entitled to vote at the special meeting is on file at our executive offices, 500 North Akard Street, Suite 4300, Dallas, Texas 75201-3331, and will be made open to the examination of any stockholder, for any purpose germane to the special meeting, during ordinary business hours, for a period of ten days prior to the special meeting.

 

You may vote by completing, signing, dating and returning your proxy card or voting instruction card in the envelope provided. You may also vote via the Internet at www.proxyvote.com or by telephone at 1-800-690-6903 by following the instructions shown on the proxy card or voting instruction card. Any stockholder attending the special meeting may vote in person. If you have returned a proxy card or voting instruction card or otherwise voted, you may revoke prior instructions and cast your vote at the special meeting by following the procedures described in the proxy statement/prospectus accompanying this notice.

 

Your vote is very important, regardless of the number of shares you own. Whether or not you are able to attend the special meeting in person, it is important that your shares be represented. Please vote as soon as possible. Voting promptly, regardless of the number of shares of stock you hold, will aid us in reducing the expense of an extended proxy solicitation. Voting your shares by returning your proxy card or voting instruction card or voting through the Internet or by telephone does not affect your right to vote in person if you attend the special meeting. For specific information regarding the voting of your shares, please refer to the section entitled “General Information About the

Merger and the Special Meeting — Questions and Answers Relating to the Special Meeting,” beginning on page 7 of the accompanying proxy statement/prospectus.

 

By Order of the Board of Directors,

Cary A. Moomjian, Jr.
Vice President, General Counsel and Secretary

 

November 20, 2009

 

FOR SPECIFIC INSTRUCTIONS ON VOTING, PLEASE REFER TO THE PROXY CARD OR VOTING
INSTRUCTION CARD INCLUDED WITH THE PROXY MATERIALS.

TABLE OF CONTENTS

 

In this proxy statement/prospectus, we refer to ENSCO International Incorporated, the Delaware corporation whose shares you currently own (together with its subsidiaries where applicable), as “Ensco” or “Ensco Delaware,” or the “Company.” Additionally, we sometimes refer to Ensco Delaware as “we,” “us,” or “our.” “You” refers to the stockholders of Ensco Delaware. We refer to ENSCO International Limited, a newly formed private limited company incorporated under English law (which, prior to the effective time of the merger, will re-register as a public limited company and be renamed “Ensco International plc”) as “Ensco UK.” A reference in this proxy statement/prospectus to ADSs means a number of American depositary shares, which, immediately after the merger, will be evidenced by one or more American depositary receipts, or “ADRs.” Each ADS represents one Class A Ordinary Share of Ensco UK, par value $0.10 per share, each, a “Class A Ordinary Share.” The number of ADSs to be issued to the stockholders of Ensco Delaware is equal to the number of shares of common stock of Ensco Delaware held by the stockholders of Ensco Delaware immediately prior to the effective time of the merger described in this proxy statement/prospectus. In addition, unless the context indicates otherwise, when we refer to shares of Ensco Delaware common stock issued and outstanding, we are excluding the treasury shares of Ensco Delaware common stock owned by or for the benefit of Ensco Delaware or its subsidiaries. Unless otherwise noted, all monetary amounts are stated in U.S. dollars.

 

This proxy statement/prospectus incorporates important business and financial information about Ensco Delaware from documents Ensco Delaware has filed with the U.S. Securities and Exchange Commission, or the “SEC,” that are not included in or delivered with this proxy statement/prospectus. See “Where You Can Find More Information.”

 

You can obtain the documents incorporated by reference into this proxy statement/prospectus by accessing the SEC website maintained at www.sec.gov. Ensco Delaware will also provide you with copies of the documents incorporated by reference into this proxy statement/prospectus, without charge. Those documents are available to any stockholder, including any beneficial owner, upon request directed to ENSCO International Incorporated at 500 North Akard Street, Suite 4300, Dallas, Texas 75201-3331; Attn: Investor Relations Department. To ensure timely delivery of such documents, any request should be made by December 11, 2009. The exhibits to those documents will generally not be made available unless they are specifically incorporated by reference into this proxy statement/prospectus or are otherwise requested by you.

 

You should rely only on the information contained in, and incorporated by reference into, this proxy statement/prospectus. We have not authorized anyone to provide you any different or additional information. Neither Ensco Delaware nor Ensco UK is making an offer of the securities in any country, state, province or territory where the offer is not permitted. For the avoidance of doubt, this proxy statement/prospectus is not intended to be and is not a prospectus for purposes of the U.K. Financial Services Authority’s Prospectus Rules. You should not assume that the information in this proxy statement/prospectus is accurate as of any date other than the date on the front cover of this proxy statement/prospectus or, in the case of documents incorporated by reference, the date of the referenced document, and neither the mailing of this proxy statement/prospectus to you nor the issuance of ADSs in connection with the merger shall create any implication to the contrary.

 

PROXY STATEMENT FOR THE SPECIAL MEETING OF
STOCKHOLDERS OF ENSCO INTERNATIONAL INCORPORATED

TO BE HELD ON December 22, 2009

 

This proxy statement/prospectus and a proxy card or voting instruction card are first being sent or distributed to stockholders of Ensco on or about November 20, 2009. Our Board of Directors, or the “Board,” is soliciting your proxy to vote your shares at the Special Meeting of Stockholders to be held at 5-Star Worldwide Conference Center at Lincoln Plaza, Suite B30 — Lower Level, 500 N. Akard Street, Dallas, Texas 75201, on Tuesday, December 22, 2009, at 10:00 a.m., Central Standard Time, or the “special meeting,” and any adjourned sessions of the special meeting. Our Board is soliciting your proxy to give all stockholders of record the opportunity to vote on matters that will be presented at the special meeting. This proxy statement/prospectus provides information on these matters to assist you in voting your shares.

 

The following questions and answers are intended to address briefly some commonly asked questions regarding the proposed merger and the special meeting. These questions and answers may not address all questions that may be important to you. Please refer to the more detailed information contained elsewhere in this proxy statement/prospectus, its annexes and exhibits and the documents referred to or incorporated by reference in this proxy statement/prospectus. For instructions on obtaining the documents incorporated by reference, see “Where You Can Find More Information.”

 

Why am I receiving this proxy statement/prospectus?

 

Our Board has approved a reorganization of our corporate structure, which would include changing the jurisdiction of incorporation of our parent company from Delaware to England and relocating our principal executive offices to the U.K. We would change the jurisdiction of incorporation of our parent company through a merger that will result in Ensco UK becoming the parent company of the Ensco group of companies and effectively will result in your owning shares in an English company instead of shares in a Delaware corporation. The merger agreement requires stockholder approval, which is why we have called a special meeting of stockholders and sent you this proxy statement/prospectus.

 

 

Who are the parties to the merger?

 

The parties to the merger described in this proxy statement/prospectus are Ensco Delaware and ENSCO Newcastle LLC, or “Ensco Mergeco,” a newly formed Delaware limited liability company. Ensco Mergeco is a wholly-owned subsidiary of ENSCO Global Limited, a newly formed Cayman Islands exempted company, or “Ensco Cayman.” Ensco Cayman is a subsidiary of Ensco Delaware.

 

What is the merger?

 

Under the Agreement and Plan of Merger and Reorganization, or the “merger agreement,” Ensco Mergeco will merge into Ensco Delaware (which we refer to as the “merger”), with Ensco Delaware surviving the merger as a wholly-owned subsidiary of Ensco Cayman. Upon consummation of the merger, each issued and outstanding share of common stock of Ensco Delaware will be converted into the right to receive one ADS. Ensco UK, together with its subsidiaries (including Ensco Delaware), will own and continue to conduct our business in substantially the same manner as is currently being conducted by Ensco Delaware and its subsidiaries.

 

What are the major actions that have been performed or will be performed to effect the merger?

 

Ensco Delaware has taken or will take the actions listed below to effect the merger. Charts describing the ownership structure among Ensco Delaware, Ensco UK, Ensco Cayman and Ensco Mergeco before and after the effective time of the merger are also set forth below.

Major Actions

 

 

Structure Chart Prior to and after the Effective Time of the Merger

 

The following diagram depicts our organizational structure before and after the merger. The diagram does not depict any legal entities owned by Ensco Delaware other than those related to the merger nor any aspects of the reorganization that are anticipated to take place after the effective time of the merger.

 

What will be Ensco’s corporate presence in the U.K.?

 

In conjunction with the reorganization, we plan to expand our presence in the U.K., including by relocating our principal executive offices to England. We expect that most of our senior executive officers and other key decision makers will move to England. We also intend to hold most of our regularly scheduled board meetings and our annual general meeting of shareholders in the U.K.

 

What will I receive in the merger?

 

The merger agreement provides that each share of Ensco Delaware issued and outstanding immediately prior to the effective time of the merger will be converted into the right to receive one ADS. Each ADS will be evidenced by an ADR, and will represent one Class A Ordinary Share.

 

The depositary or its nominee is the holder of the Class A Ordinary Shares of Ensco UK underlying your ADSs. As a holder of ADSs representing Class A Ordinary Shares, you will have the rights set forth in the deposit agreement among us, the depositary and you, which we refer to as the “deposit agreement.” Although you will not be a registered shareholder of Ensco UK and will not directly have shareholder rights in Ensco UK, through your ownership of ADSs you generally will be entitled to equivalent rights as a shareholder of Ensco UK, although the exercise of certain rights may require you to surrender your ADSs and withdraw the underlying Class A Ordinary Shares. These arrangements are substantially comparable to market standard arrangements for listing and trading shares of U.K. companies on the NYSE and other stock exchanges in the United States, or the “U.S.”

 

Will the merger dilute my economic interest?

 

No. Immediately after the effective time of the merger, your relative economic ownership in Ensco UK will remain approximately the same as your relative economic ownership of Ensco Delaware immediately before the merger.

 

Why does Ensco want to engage in the merger?

 

The merger is part of a reorganization of Ensco’s corporate structure, which includes a relocation of our principal executive offices to England, which we refer to as the “reorganization.” We expect that the reorganization will, among other anticipated benefits:

 

 

We expect that the reorganization also will result in operational and administrative efficiencies over the long term and enhance our ability to further expand in the Europe/Africa and Asia Pacific geographic regions, which represented over 77 percent of our consolidated revenue for the year ended December 31, 2008. We have had ongoing operations serving a wide range of customers in the U.K. for over 16 years. As we continue to grow our business internationally, we believe that moving to the U.K. will provide increased strategic flexibility and operational benefits. In addition, a number of our competitors are incorporated outside of the U.S. and already have

these competitive advantages. We thus believe the merger will allow us to compete more effectively on a global scale. See “The Merger Agreement — Background and Reasons for the Merger.”

 

Will the merger affect current or future operations?

 

Our principal executive offices will be moved to the U.K., which we expect will create more operational efficiencies. However, the merger is not expected to have a material impact on how we conduct day-to-day operations. While the new corporate structure would not change our future operational plans to grow our business or diminish our focus on our U.S. business, it may improve our ability to expand within our Europe/Africa and Asia Pacific geographic regions. The location of future operations will depend on the needs of the business, which will be determined without regard to Ensco UK’s jurisdiction of incorporation. Please see “The Merger Agreement — Background and Reasons for the Merger.”

 

What actions are expected to be taken following the merger?

 

Promptly following the consummation of the merger, Ensco UK, as Ensco Delaware’s ultimate parent company, expects to undertake additional transactions related to its corporate structure that will result in the reorganization of certain of Ensco UK’s subsidiaries and their respective assets. We refer to these activities and transactions in this proxy statement/prospectus as “subsequent actions.” Refer to “Forward-Looking Statements” and “Risk Factors” below for a description of certain risks associated with the reorganization.

 

When do you expect to complete the merger?

 

If the proposal to adopt the merger agreement is approved by our stockholders at the special meeting, we anticipate that the merger will become effective as soon as practicable following stockholder approval. We currently anticipate that the effective time of the merger will be at 12:01 a.m., Eastern Standard Time, on December 23, 2009, although the merger may be abandoned by our Board at any time, including after stockholder approval. Please see “Forward-Looking Statements” and “Risk Factors.”

 

Is the merger taxable to me?

 

For U.S. federal income tax purposes, the conversion of each issued and outstanding share of the common stock of Ensco Delaware into the right to receive an ADS upon the consummation of the merger generally will be treated as an exchange of such share for the ADS. Therefore, the U.S. federal income tax discussion contained herein refers to an “exchange” rather than a “conversion” in describing the U.S. federal income tax consequences of the merger.

 

Generally, for U.S. federal income tax purposes, a “U.S. holder,” which is defined below in “Material Tax Considerations Relating to the Merger — U.S. Federal Income Tax Considerations — Material Tax Consequences to Stockholders,” should recognize gain, if any, but not loss, on the receipt of ADSs in exchange for Ensco Delaware common stock in connection with the merger. A U.S. holder should generally recognize gain equal to the excess, if any, of the fair market value of the ADSs received in the merger over the U.S. holder’s adjusted tax basis in the shares of Ensco Delaware common stock. Generally, this gain should be capital gain. U.S. holders should not be permitted to recognize any loss realized on the exchange of their shares of Ensco Delaware common stock in the merger. In determining the amount of gain recognized, each of the Ensco Delaware shares transferred should be treated as the subject of a separate exchange. Thus, if a U.S. holder transfers some Ensco Delaware shares on which gains are realized and other Ensco Delaware shares on which losses are realized, the U.S. holder may not net the losses against the gains to determine the amount of gain recognized. In the case of a loss, the adjusted tax basis in each ADS received by a U.S. holder should equal the adjusted tax basis of each share of Ensco Delaware common stock exchanged therefor. Thus, subject to any subsequent changes in the fair market value of the ADSs, any loss should be preserved. Cash received by a U.S. holder in exchange for a fractional share of Ensco Delaware common stock should be treated as having been received in redemption of such fractional share. Thus, gain or loss generally should be recognized by such U.S. holder in an amount equal to the difference between the amount of cash received and the U.S. holder’s adjusted tax basis in such fractional share. A non-U.S. holder generally will not be subject to U.S. federal income tax on gain realized, if any, on the exchange of Ensco Delaware shares for ADSs or on the

receipt of cash in exchange for fractional shares of Ensco Delaware common stock. Please see “Material Tax Considerations Relating to the Merger — U.S. Federal Income Tax Considerations — Material Tax Consequences to Stockholders.”

 

For U.K. tax purposes, stockholders of Ensco Delaware who are residents of the U.S., and not residents of the U.K., will generally not be subject to U.K. taxation as a result of the merger. Generally, U.K. resident stockholders of Ensco Delaware may realize a chargeable gain or an allowable loss for U.K. corporation tax or capital gains tax purposes (as the case may be) as a result of the merger, which will be treated as giving rise to a disposal of their stock in Ensco Delaware. Generally, non-U.K. resident stockholders of Ensco Delaware should not be subject to either U.K. corporation tax or capital gains tax as a result of the merger, unless they carry on a trade in the U.K. through a permanent establishment in the U.K. or through a branch or agency in the U.K. for the purposes of U.K. corporation tax or capital gains tax, respectively, and the stock is attributable to that permanent establishment, branch or agency. In general, you will be treated as acquiring the ADSs received in the merger for consideration equal to the market value at the effective time of the merger of your shares of Ensco Delaware common stock converted in the merger. Please see “Material Tax Considerations Relating to the Merger — U.K. Tax Considerations — Material Tax Consequences to Shareholders.”

 

For stockholders of Ensco Delaware who are citizens or residents of, or otherwise subject to taxation in, a country other than the U.S. or the U.K., the tax treatment of the merger will depend on the applicable tax laws in such country.

 

WE URGE YOU TO CONSULT YOUR OWN TAX ADVISOR PRIOR TO THE SPECIAL MEETING REGARDING THE PARTICULAR TAX CONSIDERATIONS OF THE MERGER FOR YOU.

 

Will Ensco Delaware or Ensco UK be taxed as a result of the merger?

 

We believe that Ensco Delaware and Ensco UK should not incur any significant taxes in connection with consummation of the merger. Although changes in tax laws, treaties or regulations or the interpretation or enforcement of these tax laws, treaties or regulations could adversely affect the intended tax benefits of the merger to Ensco UK and its subsidiaries or the tax treatment of the post-merger corporate structure of Ensco UK, we do not believe that any of such changes would result in a material increase in taxes as compared to our current, pre-merger tax position.

 

Has the IRS or HMRC rendered a ruling on any aspects of the merger?

 

No ruling has been requested from the U.S. Internal Revenue Service, or “IRS,” in connection with the merger, and the IRS has adopted a policy of not issuing a ruling that a merger qualifies as non-taxable, unless there is a separate significant issue related to the merger. Furthermore, the IRS will not rule on whether the U.S. anti-inversion rules will apply to the merger. See “Material Tax Considerations Relating to the Merger — U.S. Federal Income Tax Considerations — The U.S. Anti-Inversion Rules.”

 

No ruling has been requested from H.M. Revenue & Customs, or “HMRC,” as to the U.K. corporation tax consequences of the merger.

 

What types of information and reports will Ensco UK make available following the merger?

 

After the effective time of the merger, we will continue to prepare financial statements in accordance with U.S. Generally Accepted Accounting Principles, or “U.S. GAAP,” and report in U.S. dollars, and will continue to file reports under the U.S. Securities Exchange Act of 1934, as amended, or the “Exchange Act,” including reports on Forms 10-K, 10-Q and 8-K with the SEC, as we currently do. We also must comply with any additional reporting requirements of English law.

 

For so long as Ensco UK has a class of securities (which include the ADSs) listed on the New York Stock Exchange, or “NYSE,” Ensco UK will be subject to rules regarding proxy solicitations and tender offers and the corporate governance requirements of the NYSE, the Exchange Act and the U.S. Sarbanes-Oxley Act of 2002 including, for example, independence requirements for audit committee composition, annual certification requirements and auditor independence rules, unless certain circumstances change. Ensco UK will be required to disclose any significant ways in which its corporate governance practices differ from those followed by U.S. domestic

companies under the NYSE’s listing standards. To the extent possible under English law and the ADS arrangement contemplated by the deposit agreement, Ensco UK’s corporate governance practices are expected to be comparable to those of Ensco Delaware. Please see “The Merger Agreement — Stock Exchange Listing,” “Comparison of Rights of Stockholders/Shareholders,” and “Effect of the Reorganization on Potential Future Status as a Foreign Private Issuer.”

 

What must I do to obtain ownership of ADSs that I become entitled to receive as a result of the merger?

 

If you hold Ensco Delaware share certificates, you will be sent a letter of transmittal, which is to be used to surrender your Ensco Delaware share certificates and to request that ADSs be issued to you. The letter of transmittal will contain instructions explaining the procedure for surrendering Ensco Delaware share certificates and requesting ADSs. YOU SHOULD NOT RETURN SHARE CERTIFICATES WITH THE ENCLOSED PROXY CARD.

 

Beneficial holders of shares held in “street name” through a bank, broker or other financial institution will not be required to take any action. Your ownership of ADSs representing Class A Ordinary Shares will be recorded in book entry form by your broker. If you are currently a beneficial holder, there will be no need for any additional action on your part.

 

It is expected that, prior to the effective time of the merger, Citibank will be appointed as the exchange agent for the merger. Ensco UK’s current share registrar is Computershare Investor Services PLC, P.O. Box 82, The Pavilions, Bridgwater Road, Bristol BS13 8AE, England, which will continue to serve as the share registrar for its Class A Ordinary Shares after the effective time of the merger, while Citibank will continue to serve as depositary for the ADSs. Citibank’s depositary offices are located at 388 Greenwich Street, New York, New York, 10013.

 

If I hold share certificates representing Ensco Delaware shares, what will be my rights in relation to Ensco UK before I exchange my certificates for ADRs?

 

From and after the effective time of the merger and pursuant to the terms of the merger agreement and the deposit agreement, stockholders who hold share certificates in Ensco Delaware will generally be entitled to the same rights with respect to Ensco UK through their ownership of ADSs, including the right to receive dividends declared by Ensco UK after the effective time of the merger and the right to exercise voting and other shareholder rights, upon surrender of their stock certificates, although the exercise of certain rights may require you to surrender your ADSs and withdraw the underlying Class A Ordinary Shares. Until Ensco Delaware stock certificates or book-entry shares are surrendered for exchange, any dividends or other distributions declared by Ensco UK after the effective time of the merger with respect to ADSs issued to former Ensco Delaware stockholders, other than any ADSs held by Ensco Delaware or any other subsidiary of Ensco UK, will accrue but will not be paid, but holders of such shares will not have voting rights with respect to Ensco UK. See “The Merger Agreement — Ownership in Ensco UK; Conversion of Shares,” and “The Merger Agreement — Dividends and Distributions; Withholdings.” Citibank will serve as exchange agent for the exchange of Ensco Delaware certificates for Ensco UK ADRs.

 

What happens to Ensco Delaware stock options, restricted stock and other equity-based awards at the effective time of the merger?

 

At the effective time of the merger, all outstanding options to purchase shares of Ensco Delaware common stock and all outstanding awards of restricted stock and other equity-based awards granted to employees and directors by the Company under our equity incentive plans prior to the effective time of the merger will entitle the holder to purchase or receive, or receive benefits or amounts based on, as applicable, an equal number of ADSs. All of such equity-based awards will generally be subject to the same terms and conditions as were applicable to such awards granted or issued by Ensco Delaware immediately prior to the effective time of the merger.

 

Immediately prior to the effective time of the merger, all existing Ensco Delaware equity incentive plans, as may be amended, will be adopted and assumed by Ensco UK except that Ensco Delaware will remain the plan sponsor of certain equity incentive plans (as further described in the merger agreement), and ADSs, rights to ADSs or benefits or amounts based on ADSs will thereafter be granted or issued under each equity incentive plan instead of shares of Ensco Delaware currently being granted or issued under such plans. Future awards would be subject to and governed by the terms of our equity incentive plans, as assumed by Ensco UK if applicable, and any agreements entered into

pursuant thereto. Please see “The Merger Agreement — Stock Compensation and Benefit Plans and Programs” for more information, including a description of the tax withholding and regulatory consequences of the merger.

 

Can I trade my Ensco Delaware shares before the merger is completed?

 

Yes. Ensco Delaware common stock will continue trading on the NYSE through the last trading day prior to the date of completion of the merger, which date of completion is currently anticipated to be December 23, 2009.

 

After the merger, where can I trade my ADSs?

 

It is a condition to the completion of the merger that the ADSs will be authorized for listing on the NYSE. We will submit an application to the NYSE and expect that, immediately following the effective time of the merger, the ADSs will be listed on the NYSE under the symbol “ESV,” the same symbol under which your Ensco Delaware common stock is currently listed. We do not plan to list the ADSs or Ensco UK’s shares on any other securities exchange, including the London Stock Exchange.

 

What is the voting requirement to approve the proposal to adopt the merger agreement? What is the voting requirement to approve the other proposal?

 

For the merger to be able to proceed, the majority of the outstanding shares of common stock of Ensco Delaware entitled to vote at the special meeting must be voted in the affirmative for the adoption of the merger agreement. Proposal 2 will be approved upon establishment of a quorum if the votes cast in favor of such proposal exceed the votes cast opposing such proposal.

 

What is the Board’s voting recommendation?

 

Our Board recommends that you vote your shares as follows:

 

Proposal 1 — FOR the adoption of the merger agreement; and

 

Proposal 2 — FOR the approval of any adjournments or postponements of the special meeting to a later date to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the adoption of the Agreement and Plan of Merger and Reorganization.

 

 

Who may vote at the special meeting?

 

You have received these proxy materials because you held shares of common stock of Ensco Delaware on November 16, 2009, the record date established for the special meeting, or the “record date,” and, therefore, you are qualified to receive notice of and to vote at the special meeting.

 

As of the record date, there were 142,515,432 shares of Ensco Delaware common stock outstanding and entitled to vote at the special meeting. As of the record date, our directors and executive officers and their affiliates beneficially owned, in the aggregate, approximately 931,151 of such shares, representing beneficial ownership of less than 1 percent of the outstanding shares of Ensco Delaware common stock as of that date, and these shares are included in the number of shares entitled to vote at the special meeting.

 

What is this proxy statement/prospectus?

 

This document serves as the proxy statement of Ensco Delaware in connection with the solicitation of proxies to obtain votes on a proposal to adopt the merger agreement and the other proposal described herein. This document is also a prospectus of Ensco UK for purposes of the U.S. Securities Act of 1933, as amended, or the “Securities Act,” in connection with the issuance in the merger of ADSs representing Class A Ordinary Shares. For the avoidance of doubt, however, this proxy statement/prospectus is not intended to be and is not a prospectus for purposes of the U.K. FSA’s Prospectus Rules.

 

We encourage you to read this proxy statement/prospectus carefully.

 

What is being delivered with the proxy statement/prospectus?

 

These proxy materials include:

 

 

Why am I receiving paper copies of these proxy materials when previously I received only a “Notice of Internet Availability of Proxy Materials” for the Company’s annual stockholders’ meeting?

 

Under SEC rules, we are required to distribute paper copies of these proxy materials because of the subject matter of the business to be conducted at the special meeting.

 

When and where is the special meeting?

 

Our special meeting will take place on December 22, 2009, at 10:00 a.m., Central Standard Time, at the 5-Star Worldwide Conference Center at Lincoln Plaza, Suite B30 — Lower Level, 500 N. Akard Street, Dallas, Texas 75201. Only stockholders of record on the record date (i.e., November 16, 2009) are invited to attend the special meeting and are requested to vote on the proposal described in this proxy statement/prospectus.

 

Who is soliciting my proxy?

 

Proxies are being solicited by the Board of Ensco Delaware.

 

Who is paying for the cost of this proxy solicitation?

 

We are paying the costs of soliciting proxies. Upon request, we will reimburse brokers, banks, trusts and other nominees for reasonable expenses incurred by them in forwarding the proxy materials to beneficial owners of shares of our common stock.

 

In addition to soliciting proxies by mail and over the Internet, our Board, our officers and employees, or our transfer agent, may solicit proxies on our behalf, personally or by telephone, and we have engaged a proxy solicitor to solicit proxies on our behalf by telephone and by other means. We expect the cost of our private proxy solicitor to be approximately $20,000. We will also solicit proxies by e-mail from stockholders who are employees or who previously requested proxy materials be sent electronically. Arrangements also may be made with brokerage houses and other custodians, nominees and fiduciaries for the forwarding of solicitation materials to the beneficial owners of Ensco Delaware shares held by those persons, and Ensco Delaware will reimburse such persons for reasonable expenses incurred by them in connection with the forwarding of solicitation materials.

 

Stockholders that vote through the Internet are advised that there may be costs associated with electronic access, such as usage charges from Internet access providers and telephone companies that will be borne by the stockholder in order for the stockholder to connect to or access the Internet site.

 

Whom should I contact with questions?

 

We have retained D.F. King & Co., Inc. as proxy solicitor in connection with the special meeting. Our stockholders may contact our proxy soliciting agent at:

 

D.F. King & Co, Inc.

48 Wall Street, 22^nd Floor

New York, New York 10005

 

Banks and Brokers may call 1-212-269-5550

All others may call toll-free at 1-800-859-8509

 

Alternatively, you may obtain information from us by contacting our Investor Relations Department by telephone at (214) 397-3000, or by mail at:

 

ENSCO International Incorporated

Attention: Investor Relations Department

500 North Akard Street, Suite 4300

Dallas, Texas 75201-3331

 

Where are Ensco Delaware’s principal executive offices located and what is the main telephone number?

 

Ensco Delaware’s principal executive offices are located at 500 North Akard Street, Suite 4300, Dallas, Texas 75201-3331 and the main telephone number is (214) 397-3000.

 

What is the quorum requirement for the special meeting?

 

For purposes of the special meeting, the holders of at least a majority of the shares of our common stock issued and outstanding and entitled to vote at the special meeting will constitute a quorum. For purposes of determining whether there is a quorum, abstentions and broker “non-votes,” described below under “What happens if I do not give specific voting instructions? How are broker non-votes treated?” and “How are abstentions treated?”, are treated as shares that are present.

 

What is the difference between holding shares as a stockholder of record and as a beneficial owner of shares held in street name?

 

Stockholders of Record.  If your shares are registered directly in your name with our transfer agent, you are a “stockholder of record” with respect to those shares, and this proxy statement/prospectus was sent directly to you by us. As a record holder, you vote your shares directly by following the instructions set forth in the enclosed proxy card.

 

Beneficial Owners of Shares Held in Street Name.  If your shares are held in the name of a broker, bank, trust or other nominee as a custodian, you are a “street name” holder or in the general account of the broker or other organization. Consequently, this proxy statement/prospectus was forwarded to you by that organization. The organization holding your account is considered the stockholder of record for purposes of voting at the special meeting. As a beneficial owner, you have the right to direct that organization on how to vote the shares held in your account by executing a voting instruction card. You should receive information regarding voting instructions directly from that organization.

 

If I am a stockholder of Ensco Delaware, how do I vote?

 

Stockholders of Record.  If you are a “stockholder of record,” you have several choices. You can vote your shares by following the specific instructions provided on the proxy card:

 

 

Beneficial Owners of Shares Held in Street Name.  If you hold your shares in “street name,” your broker, bank, trust or other nominee will arrange to provide materials and instructions for voting your shares.

 

Beneficial Owners of Shares Held in the ENSCO Savings Plan.  If you are a current or former Ensco Delaware employee who holds shares in the ENSCO Savings Plan, you will receive voting instructions from the trustee of the plan for shares allocated to your account. If you fail to give voting instructions to the trustee, your shares will be voted by the trustee in the same proportion as shares held by the trustee for which voting instructions were received. To allow sufficient time for voting by the trustee and administrator of the ENSCO Savings Plan, your voting instructions for shares held in the plan must be received by 11:59 p.m. Eastern Standard Time on December 18, 2009.

 

What happens if I do not give specific voting instructions? How are broker non-votes treated?

 

Stockholders of Record.  All properly executed proxy cards received by the Board from stockholders of record that do not specify how stock should be voted will be voted “FOR” the proposal to adopt the merger agreement and the other proposal. With respect to any other matter that may properly be brought before the special meeting, the shares shall be voted in accordance with the judgment of the person or persons named on the proxy card.

 

Beneficial Owners of Shares Held in Street Name.  If you are a beneficial owner of shares held in street name and do not provide the organization that holds your shares with specific voting instructions, under the rules of various national and regional securities exchanges, the organization that holds your shares may generally vote on “routine” matters but cannot vote on “non-routine” matters. If the organization that holds your shares does not receive instructions from you on how to vote your shares on a non-routine matter or otherwise elects not to vote your shares in the absence of your direction on a routine matter, the organization that holds your shares will inform our Inspector of Election that it does not have the authority (or otherwise declines) to vote on such matter with respect to your shares. This is generally referred to as a “broker non-vote.”

 

A vote on the proposal to adopt the merger agreement is regarded as a non-routine matter and failure to direct your broker on how to vote on such a proposal has the same effect as a vote AGAINST it. A broker non-vote with respect to Proposal 2 will have no effect on this proposal, it is a routine matter. We encourage you to provide voting instructions to the organization that holds your shares by carefully following the instructions provided in the proxy card or voting instruction card.

 

Can I vote my shares in person at the special meeting?

 

Stockholders of Record.  If you are a “stockholder of record,” you may vote your shares in person at the special meeting.

 

Beneficial Owners of Shares Held in Street Name.  If you hold your shares in “street name,” you must obtain a proxy from your broker, bank, trust or other nominee giving you the right to vote the shares at the special meeting.

 

How are abstentions treated?

 

In determining the number of votes cast for a proposal, shares abstaining from voting or not voted on a matter will be counted for quorum purposes. However, shares abstaining from voting or not voted with respect to Proposal 1 to approve the adoption of the merger agreement will be treated as votes AGAINST it. Shares abstaining from voting or not voted with respect to Proposal 2 will have no effect on such proposal.

 

May I change my vote after I have voted?

 

You may revoke your proxy or otherwise change your vote by doing one of the following:

 

 

If you voted electronically, you can also return to www.proxyvote.com and change your vote before the special meeting. Follow the same voting process and your original vote will be superseded.

 

If you are a beneficial owner of our shares and a broker or other nominee holds your shares, you can revoke your proxy or otherwise change your vote by following the instructions provided by your broker or other nominee.

 

Is my vote confidential?

 

Proxy instructions, ballots, and voting tabulations that identify individual stockholders are handled in a manner that protects your voting privacy. Your vote will not be disclosed either within our company or to third parties, except:

 

 

Occasionally, stockholders provide written comments on their proxy card, which may be forwarded to management and our Board.

 

Where can I find the voting results of the special meeting?

 

The preliminary voting results will be announced at the special meeting and disclosed in a press release following the special meeting. The final voting results also will be tallied by the Inspector of Election and published in a report of voting results to be filed with the SEC promptly following the special meeting. We also intend to publicly disclose the voting results on our website within 14 days following the completion of the special meeting, as well as publish the voting results in our Form 10-K for the fiscal year ended December 31, 2009, which we will file with the SEC. You can find the voting results and the Form 10-K on our website at www.enscointernational.com.

 

SUMMARY

 

THE MERGER

 

Parties to the Merger (see page 28)

 

The Merger (see page 31)

 

Reasons for the Merger (see page 29)

	•	establish a corporate headquarters in the U.K. where we already have substantial operations and which is more centrally located within our area of worldwide operations;
	•	improve access to key customers located in the U.K. and Western Europe or who routinely travel to the U.K.;

	•	enhance our access to European institutional investors;
	•	improve the general perception with customers and the investment community that we are an international driller with an increasing focus on deepwater operations rather than a Gulf of Mexico jackup driller (which generally faces a perception of shorter-term contracts, less contract backlog and higher volatility of cash flow);
	•	locate us in a country with a stable and developed legal regime with established standards of corporate governance, including the rights of shareholders, a favorable tax regime and an extensive network of tax treaties; and
	•	allow us to potentially achieve a global effective tax rate comparable to that of our global competitors.

 

Conditions to Completion of the Merger (see page 34)

	•	upon the SEC’s declaration of effectiveness of the registration statement on Form S-4 with respect to the merger, Ensco Delaware will have contributed all ADSs to Ensco Cayman, which will in turn have contributed all such ADSs to Ensco Mergeco;
	•	the merger agreement will have been adopted by the requisite vote of Ensco Delaware stockholders;
	•	Ensco UK will have re-registered as a public limited company;
	•	following stockholder approval of the merger agreement, Ensco Delaware will have contributed all shares of Ensco Cayman to Ensco UK;
	•	a special resolution will have been passed to alter the rights of the holders of the Class A Ordinary Shares to have the same rights as holders of Class B Ordinary Shares, nominal value £1.00 each, or “Class B Ordinary Shares,” conditional upon the merger becoming unconditional;
	•	the ADSs will have been authorized for listing on the NYSE, subject to official notice of issuance;
	•	Baker & McKenzie LLP, legal counsel to Ensco Delaware, will have delivered a tax opinion in form and substance acceptable to Ensco Delaware;
	•	no decree, order or injunction will have been in effect with respect to the SEC registration statement of which this proxy statement/prospectus is a part;
	•	a registration statement on Form F-6 filed with the SEC in connection with the issuance of the ADSs to be delivered pursuant to the merger will have become effective under the Securities Act, and no stop order with respect thereto shall be in effect; and
	•	no law or order prohibiting or pending lawsuit seeking to prohibit the merger will have been issued or filed by any U.S., European Union or U.K. governmental entity, subject to certain exceptions described in this proxy statement/prospectus.

 

Regulatory Approvals (see page 36)

 

Rights of Dissenting Stockholders (see page 36)

 

Accounting Treatment of the Merger (see page 37)

 

TAX CONSIDERATIONS

 

Taxation of Ensco Delaware and Ensco UK (see page 44)

 

U.S. Tax Considerations (see page 39)

 

U.K. Tax Considerations (see page 47)

 

Other Tax Considerations

 

OTHER INFORMATION

 

Ownership in Ensco UK; Conversion of Shares (see page 32)

 

Rights of Stockholders/Shareholders (see page 36)

 

Stock Exchange Listings (see page 36)

 

Market Price Information

 

Recommendation of the Board (see page 35)

 

Special Meeting of Stockholders (see page 7)

 

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

		Nine-Month Period
		Ended September 30,								Year Ended December 31,
		2009				2008				2008				2007				2006				2005				2004
		(In millions, except per share amounts)
Consolidated Statement of Income Data
Revenues		$	1,446.3			$	1,788.8			$	2,393.6			$	2,058.2			$	1,748.7			$	991.1			$	699.0
Operating expenses
Contract drilling (exclusive of depreciation)			524.8				566.8				752.0				644.1				543.5				434.9				390.6
Depreciation			149.8				139.4				186.5				177.5				168.5				147.5				127.2
General and administrative			41.6				41.7				53.8				59.5				44.6				32.0				33.1
Operating income			730.1				1,040.9				1,401.3				1,177.1				992.1				376.7				148.1
Other income (expense), net			6.2				4.8				(4.2	)			37.8				(5.9	)			(24.0	)			(33.6	)
Provision for income taxes			133.8				192.0				237.3				244.8				241.3				94.8				27.5
Income from continuing operations			602.5				853.7				1,159.8				970.1				744.9				257.9				87.0
(Loss) income from discontinued operations, net(1)			(28.2	)			1.6				(3.1	)			28.8				30.3				27.5				6.2
Cumulative effect of accounting change, net(2)			—				—				—				—				0.6				—				—
Net income			574.3				855.3				1,156.7				998.9				775.8				285.4				93.2
Less: Net income attributable to noncontrolling interests			(3.6	)			(4.3	)			(5.9	)			(6.9	)			(6.1	)			(0.5	)			(0.2	)
Net income attributable to Ensco		$	570.7			$	851.0			$	1,150.8			$	992.0			$	769.7			$	284.9			$	93.0
Earnings (loss) per common share — basic
Continuing operations		$	4.22			$	5.91			$	8.06			$	6.52			$	4.83			$	1.69			$	0.58
Discontinued operations			(0.20	)			0.01				(0.02	)			0.19				0.20				0.18				0.04
Cumulative effect of accounting change			—				—				—				—				—				—				—
		$	4.02			$	5.92			$	8.04			$	6.71			$	5.03			$	1.87			$	0.62

		Nine-Month Period
		Ended September 30,								Year Ended December 31,
		2009				2008				2008				2007				2006				2005				2004
		(In millions, except per share amounts)
Earnings (loss) per common share — diluted
Continuing operations		$	4.21			$	5.90			$	8.04			$	6.50			$	4.81			$	1.68			$	0.58
Discontinued operations			(0.20	)			0.01				(0.02	)			0.19				0.20				0.18				0.04
Cumulative effect of accounting change			—				—				—				—				—				—				—
		$	4.01			$	5.91			$	8.02			$	6.69			$	5.01			$	1.86			$	0.62
Net income attributable to Ensco common shares
Basic		$	563.7			$	842.1			$	1,138.2			$	984.7			$	765.4			$	283.9			$	92.7
Diluted		$	563.7			$	842.1			$	1,138.2			$	984.7			$	765.4			$	283.9			$	92.7
Weighted-average common shares outstanding
Basic			140.3				142.2				141.6				146.7				152.2				151.7				150.5
Diluted			140.4				142.6				141.9				147.2				152.8				152.3				150.5
Cash dividends per common share		$	0.075			$	0.075			$	0.10			$	0.10			$	0.10			$	0.10			$	0.10
Consolidated Balance Sheet and Cash Flow Statement Data
Working capital		$	1,147.8			$	769.4			$	973.0			$	625.8			$	602.3			$	347.0			$	277.9
Total assets			6,455.2				5,457.2				5,830.1				4,968.8				4,334.4				3,617.9				3,322.0
Long-term debt, net of current portion			265.8				282.9				274.3				291.4				308.5				475.4				527.1
Ensco stockholders’ equity			5,284.2				4,376.1				4,676.9				3,752.0				3,216.0				2,540.0				2,193.9
Cash flow from continuing operations			938.2				733.8				1,125.4				1,211.2				922.9				336.7				230.4

(1)		See Note 11 to the 2008 consolidated financial statements included in “Item 8. Financial Statements and Supplementary Data” of our October Form 8-K.
(2)		On January 1, 2006, we recognized a cumulative adjustment related to the adoption of SFAS No. 123 (revised 2004) “Share-Based Payment,” or “FAS 123(R).” See Note 9 to the 2008 consolidated financial statements included in “Item 8. Financial Statements and Supplementary Data” of our October Form 8-K.

 

SUMMARY PRO FORMA FINANCIAL INFORMATION

 

FORWARD-LOOKING STATEMENTS

	•	the merger may not be approved by our stockholders,
	•	our Board may choose to defer or abandon the merger at any time,
	•	changes in foreign or domestic laws, including tax laws, that could effectively preclude us from completing the merger or reduce or eliminate the benefits we expect to achieve from the reorganization,
	•	negative publicity resulting from the proposed merger having an adverse effect on our business,
	•	an SEC stop order or other action or any other decree, order or injunction preventing the registration statement of which this proxy statement/prospectus is a part from becoming or remaining effective or preventing us from holding the special meeting or completing the merger,
	•	an inability to satisfy all of the conditions to closing set forth in the merger agreement,
	•	an inability to realize expected benefits from the merger or the occurrence of difficulties in connection with the merger,
	•	costs related to the merger, which could be greater than expected,
	•	industry conditions and competition, including changes in rig supply and demand or new technology,
	•	risks associated with the global economy and its impact on capital markets and liquidity,
	•	prices of oil and natural gas, and their impact upon future levels of drilling activity and expenditures,
	•	further declines in rig activity, which may cause us to idle or stack additional rigs,
	•	excess rig availability or supply resulting from delivery of new drilling rigs,
	•	heavy concentration of our rig fleet in premium jackups,
	•	cyclical nature of the industry,
	•	worldwide expenditures for oil and natural gas drilling,
	•	the ultimate resolution of the ENSCO 69 situation in general and the potential return of the rig or package policy political risk insurance recovery in particular,
	•	changes in the timing of revenue recognition resulting from the deferral of certain revenues for mobilization of our drilling rigs, time waiting on weather or time in shipyards, which are recognized over the contract term upon commencement of drilling operations,
	•	operational risks, including excessive unplanned downtime and hazards created by severe storms and hurricanes,
	•	risks associated with offshore rig operations or rig relocations in general, and in foreign jurisdictions in particular,
	•	renegotiation, nullification, cancellation or breach of contracts or letters of intent with customers or other parties, including failure to negotiate definitive contracts following announcements or receipt of letters of intent,

	•	inability to collect receivables,
	•	changes in the dates new contracts actually commence,
	•	changes in the dates our rigs will enter a shipyard, be delivered, return to service or enter service,
	•	risks inherent to domestic and foreign shipyard rig construction, repair or enhancement, including risks associated with concentration of our ENSCO 8500 Series® rig construction contracts in a single foreign shipyard, unexpected delays in equipment delivery and engineering or design issues following shipyard delivery,
	•	availability of transport vessels to relocate rigs,
	•	environmental or other liabilities, risks or losses, whether related to hurricane damage, losses or liabilities (including wreckage or debris removal) in the Gulf of Mexico or otherwise, that may arise in the future which are not covered by insurance or indemnity in whole or in part,
	•	limited availability or high cost of insurance coverage for certain perils such as hurricanes in the Gulf of Mexico or associated removal of wreckage or debris,
	•	self-imposed or regulatory limitations on drilling locations in the Gulf of Mexico during hurricane season,
	•	impact of current and future government laws and regulation affecting the oil and gas industry in general and our operations in particular, including taxation, as well as repeal or modification of same,
	•	our ability to attract and retain skilled personnel,
	•	governmental action and political and economic uncertainties, including expropriation, nationalization, confiscation or deprivation of our assets,
	•	terrorism or military action impacting our operations, assets or financial performance,
	•	outcome of litigation, legal proceedings, investigations or insurance or other claims,
	•	adverse changes in foreign currency exchange rates, including their impact on the fair value measurement of our derivative financial instruments,
	•	potential long-lived asset or goodwill impairments, and
	•	potential reduction in fair value of our auction rate securities.

 

In considering whether to vote in favor of the proposal to adopt the merger agreement in connection with the reorganization, you should consider carefully the following risks or investment considerations, in addition to the other information in this proxy statement/prospectus. As set forth below, we have identified the material factors you should consider before making a decision on whether to vote in favor of the proposal to adopt the merger agreement and the other proposal described herein, and we have identified the material risks that could cause our actual plans or results to differ materially from those included in the forward-looking statements contained or incorporated by reference herein. You should consider these risks when deciding how to vote. In addition, you should also review carefully the risk factors discussed in Part I, Item 1A “Risk Factors” of our 2008 Form 10-K and in our subsequent reports filed pursuant to the Securities Exchange Act of 1934, as amended, as they discuss risks affecting our business generally that could also cause our actual plans or results to differ materially from those included in the forward-looking statements contained or incorporated by reference herein.

 

Some Ensco Delaware stockholders will recognize a taxable gain as a result of the merger and, in some cases, will not be able to recognize any losses realized.

 

For U.S. federal income tax purposes, the conversion of each issued and outstanding share of the common stock of Ensco Delaware into the right to receive an ADS upon the consummation of the merger generally will be treated as an exchange of such share for the ADS. Therefore, the U.S. federal income tax discussion contained herein refers to an “exchange” rather than a “conversion” in describing the U.S. federal income tax consequences of the merger.

 

Generally, for U.S. federal income tax purposes, a U.S. holder, which is defined below in “Material Tax Considerations Relating to the Merger — U.S. Federal Income Tax Considerations — Material Tax Consequences to Stockholders,” should recognize gain, if any, but not loss, on the receipt of ADSs in exchange for Ensco Delaware common stock in connection with the merger. A U.S. holder should generally recognize gain equal to the excess, if any, of the fair market value of the ADSs received in the merger over the U.S. holder’s adjusted tax basis in the shares of Ensco Delaware common stock exchanged therefor. Generally, this gain should be capital gain. U.S. holders should not be permitted to recognize any loss realized on the exchange of their shares of Ensco Delaware common stock in the merger. In determining the amount of gain recognized, each of the Ensco Delaware shares transferred should be treated as the subject of a separate exchange. Thus, if a U.S. holder transfers some Ensco Delaware shares on which gains are realized and other Ensco Delaware shares on which losses are realized, the U.S. holder may not net the losses against the gains to determine the amount of gain recognized. In the case of a loss, the adjusted tax basis in each ADS received by a U.S. holder should equal the adjusted tax basis of each share of Ensco Delaware common stock exchanged therefor. Thus, subject to any subsequent changes in the fair market value of the ADSs, any loss should be preserved. In addition, the holding period for any ADSs received by U.S. holders should include the holding period of the Ensco Delaware shares exchanged therefor. Cash received by a U.S. holder in exchange for a fractional share of Ensco Delaware common stock should be treated as having been received in redemption of such fractional share. Thus, gain or loss generally should be recognized by such U.S. holder in an amount equal to the difference between the amount of cash received and the U.S. holder’s adjusted tax basis in such fractional share. A non-U.S. holder generally will not be subject to U.S. federal income tax on gain realized, if any, on the exchange of Ensco Delaware shares for ADSs or on the receipt of cash in exchange for fractional shares of Ensco Delaware common stock. Please see “Material Tax Considerations Relating to the Merger — U.S. Federal Income Tax Considerations — Material Tax Consequences to Stockholders.”

 

Generally, U.K. resident stockholders of Ensco Delaware may realize a chargeable gain or an allowable loss for U.K. corporation tax or capital gains tax purposes (as the case may be) as a result of the merger, which will be treated as giving rise to a disposal of their stock in Ensco Delaware. Generally, non-U.K. resident stockholders of Ensco Delaware should not be subject to either U.K. corporation tax or capital gains tax as a result of the merger, unless they carry on a trade in the U.K. through a permanent establishment in the U.K. or through a branch or agency in the U.K. for the purposes of U.K. corporation tax or capital gains tax respectively, and the stock is attributable to that permanent establishment, branch or agency. In general, you will be treated as acquiring the ADSs received in the merger for a consideration equal to the market value at the effective time of the merger of your shares of Ensco

Delaware common stock converted in the merger. Please see “Material Tax Considerations Relating to the Merger — U.K. Tax Considerations — Material Tax Consequences to Shareholders.”

 

For stockholders of Ensco Delaware who are citizens or residents of, or otherwise subject to taxation in, a country other than the U.S. or the U.K., the tax treatment of the merger will depend on the applicable tax laws in such country.

 

WE URGE YOU TO CONSULT YOUR OWN TAX ADVISOR PRIOR TO THE SPECIAL MEETING REGARDING THE PARTICULAR TAX CONSIDERATIONS OF THE MERGER APPLICABLE TO YOU.

 

HMRC may disagree with our conclusions on the U.K. tax treatment of the merger and HMRC has not provided (and we have not requested) a ruling on the U.K. tax aspects of the merger.

 

Based on current U.K. corporation tax law and the current U.K.-U.S. income tax treaty, as amended, and any amendments to either current U.K. corporation tax law or such treaty announced prior to the date hereof, we expect that the merger will not result in any material U.K. corporation tax liability to any of Ensco Delaware, Ensco UK or Ensco Mergeco. Further, we believe that we have satisfied all stamp duty reserve tax, or “SDRT,” payment and filing obligations in connection with the issuance and deposit of the Class A Ordinary Shares into the ADS facility pursuant to the deposit agreement.

 

However, if HMRC disagrees with this view, it may take the position that material U.K. corporation tax or SDRT liabilities or amounts on account thereof are payable by any one or more of these companies as a result of the reorganization, in which case we expect that we would contest such assessment. To contest such assessment, we may be required to remit cash or provide security of the amount in dispute, or such lesser amount as permitted under U.K. law and acceptable to HMRC, to prevent HMRC from seeking enforcement actions pending the dispute of such assessment. If we were unsuccessful in disputing the assessment, the implications could be materially adverse to us. HMRC has not provided (and we have not requested) a ruling on the U.K. tax aspects of the merger. There can be no assurance that HMRC will agree with our interpretation of the U.K. tax aspects of the merger or any related matters associated therewith.

 

The IRS may disagree with our conclusions on tax treatment of the merger.

 

We expect that the merger will not result in any material U.S. federal income tax liability to Ensco Delaware or Ensco UK. However, the IRS may disagree with our assessments of the effects or interpretation of the tax laws, treaties or regulations or their enforcement with respect to the merger. Nevertheless, even if our conclusions on the U.S. tax treatment of the merger to Ensco Delaware and Ensco UK do not ultimately prevail, we do not believe that a contrary treatment of the merger by the IRS would result in a material increase in U.S. taxes compared to our current, pre-merger U.S. tax position. In this event, however, we may not realize the expected tax benefits of the merger and our results of operations may be adversely affected in comparison to what they would have been if the IRS agreed with our conclusions.

 

Ensco UK’s net income and cash flow would be reduced if Ensco UK becomes subject to U.S. corporate income tax.

 

Ensco UK and other non-U.S. Ensco UK affiliates will conduct their operations in a manner intended to ensure that Ensco UK and its non-U.S. affiliates do not engage in the conduct of a U.S. trade or business. However, if Ensco UK or any of its non-U.S. affiliates is or are engaged in a trade or business in the U.S., Ensco UK or such non-U.S. affiliates would be required to pay U.S. corporate income tax on income that is subject to the taxing jurisdiction of the U.S. If this occurs, our results of operations may be adversely affected. Additionally, after the merger, Ensco Delaware and its then existing U.S. subsidiaries will continue to be subject to U.S. corporate income tax on their worldwide income, and Ensco Delaware’s then existing foreign subsidiaries will continue to be subject to U.S. corporate income tax on their U.S. operations.

Ensco UK may be treated as a U.S. corporation for U.S. federal income tax purposes following the merger.

 

Generally for U.S. federal income tax purposes, a corporation is considered tax resident in the place of its incorporation. Because Ensco UK is incorporated under U.K. law, it should be deemed a U.K. corporation under these general rules. However, Section 7874 of the U.S. Internal Revenue Code of 1986, as amended (which we refer to as the “Code”) generally provides that a corporation organized outside the U.S. which acquires substantially all of the assets of a corporation organized in the U.S. will be treated as a U.S. corporation (and, therefore, a U.S. tax resident) for U.S. federal income tax purposes if shareholders of the acquired U.S. corporation own at least 80 percent (of either the voting power or the value) of the stock of the acquiring foreign corporation after the acquisition and the acquiring foreign corporation does not have substantial business activities in the country in which it is organized. Pursuant to the merger, Ensco UK will acquire directly or indirectly all of Ensco Delaware’s assets, and Ensco Delaware shareholders will hold 100 percent of Ensco UK by virtue of their stock ownership of Ensco Delaware. As a result. Ensco Delaware and, following the merger, Ensco UK must have substantial business activities in the U.K. for Ensco UK to avoid being treated as a U.S. corporation for U.S. federal income tax purposes under Section 7874. There is no “safe harbor” or other guidance that confirms when a foreign corporation’s business activities in its country of incorporation are deemed to be substantial. Therefore, it is possible that the IRS would interpret the Section 7874 “anti-inversion” rules so as to treat Ensco UK as a U.S. corporation after the consummation of the merger. Moreover, the United States Congress, the IRS, the United Kingdom Parliament or HMRC may enact new statutory or regulatory provisions that could adversely affect Ensco UK’s status as a non-U.S. corporation or otherwise adversely affect Ensco UK’s anticipated global tax position following the merger and the subsequent actions. Retroactive statutory or regulatory actions have occurred in the past, and there can be no assurance that any such provisions, if enacted or promulgated, would not have retroactive application to Ensco UK, the merger or the subsequent actions.

 

However, Ensco UK is a company formed under English law, and Ensco Delaware has historic, continuous and substantial business activities in the U.K as a result of its longstanding North Sea drilling activities and management and control over the Europe and Africa Business Unit, headquartered in Aberdeen, Scotland. We, therefore, believe Ensco UK should not be treated as a U.S. corporation for U.S. federal income tax purposes under Section 7874. However, there is no certainty that the IRS will not assert a contrary position, in which case, we could become involved in tax controversy with the IRS regarding possible additional U.S. tax liability. If we are unsuccessful in resolving any such tax controversy in our favor, we would likely not realize the tax savings we anticipate achieving through the merger and the reorganization, and we could be liable for additional U.S. federal income tax as a result of certain transactions undertaken as part of the reorganization. Please see “Material Tax Considerations Relating to the Merger — U.S. Federal Income Tax Considerations — The U.S. Anti-Inversion Rules.”

 

The merger may not allow us to maintain a competitive worldwide effective tax rate.

 

We believe that the merger should improve our ability to maintain a competitive worldwide effective tax rate because the U.K. corporate tax rate is lower than the U.S. corporate tax rate and because the U.K. has implemented a dividend exemption system that generally does not subject non-U.K. earnings to U.K. tax when such earnings are repatriated to the U.K. in the form of dividends from non-U.K. subsidiaries. In addition, the U.K. Government is consulting on reform of the U.K. controlled foreign companies rules (under which, in some circumstances, low-taxed profits of foreign subsidiaries of U.K. companies may be taxed in the U.K.) with a view to moving towards a more territorial system of taxing foreign profits of U.K. companies. No reform proposals have yet been proposed by the U.K. Government and no new legislation is expected before 2011.

 

However, we cannot provide any assurances as to what our effective tax rate will be after the merger because of, among other things, uncertainty regarding the nature and extent of our business activities in any particular jurisdiction in the future and the tax laws of such jurisdictions, as well as changes in U.S. and other tax laws. Our actual effective tax rate may vary from our expectation and that variance may be material. Additionally, the tax laws of the U.K. and other jurisdictions could change in the future, and such changes could cause a material change in our worldwide effective tax rate.

 

We also could be subject to future audits conducted by foreign and domestic tax authorities, and the resolution of such audits could significantly impact our effective tax rate in future periods, as would any reclassification or

other matter (such as changes in applicable accounting rules) that increases the amounts we have provided for income taxes in our consolidated financial statements. There can be no assurance that we would be successful in attempting to mitigate the adverse impacts resulting from any changes in law, audits and other matters. Our inability to mitigate the negative consequences of any changes in the law, audits and other matters could cause our effective tax rate to increase and our results of operations to suffer.

 

Our Board may choose to defer or abandon the merger at any time.

 

Completion of the merger may be deferred or abandoned by action of our Board at any time, including after stockholder approval. While we currently expect the merger to take place promptly after the proposal to adopt the merger agreement is approved at the special meeting, to be followed (in short order) by the subsequent actions, the Board may defer completion before or after the special meeting or may abandon the merger at any time, including after stockholder approval, because of, among other reasons, changes in existing or proposed tax legislation, failure of Baker & McKenzie LLP to deliver tax opinions in form and substance acceptable to us, our determination that HMRC does not agree with our view of the U.K. corporation tax or SDRT implications of certain aspects of the reorganization, our determination that the IRS does not agree with our views on certain tax matters, our determination that the reorganization would involve tax or other risks that outweigh their benefits, our determination that the level of expected benefits associated with the reorganization would otherwise be reduced, a dispute with the taxation authorities over the reorganization (or certain aspects thereof), changes in U.K. or U.S. tax laws, rates, or regulations that would adversely affect our ability to achieve the expected benefits of the reorganization, an unexpected increase in the cost to complete the reorganization or any other determination by our Board that the reorganization would not be in the best interests of Ensco Delaware or its stockholders or that the reorganization would have material adverse consequences to Ensco Delaware or its stockholders.

 

Changes in domestic and foreign laws, including tax law changes, could adversely affect Ensco UK, its subsidiaries and its shareholders.

 

Changes in tax laws, regulations or treaties or the interpretation or enforcement thereof, in both or either of the U.S. or the U.K., could adversely affect the tax consequences of the reorganization to Ensco UK and its shareholders and/or our effective tax rates (whether associated with the reorganization or otherwise). With respect to the reorganization, for example, one reason for the reorganization is to begin to align our structure so as to have the opportunity, going forward, to continue to take advantage of U.K. corporate tax rates, which are lower than the U.S. income tax rates, and to take advantage of the recent dividend exemption system implemented in the U.K., which generally does not subject non-U.K. earnings to U.K. tax when such earnings are repatriated to the U.K. as dividends. Future changes in tax laws, regulations or treaties or the interpretation or enforcement thereof, particularly any such changes resulting in a material change in the U.S. and the U.K. tax rates relative to each other, could reduce or eliminate the benefits that we expect to achieve from the reorganization.

 

The expected benefits of the reorganization may not be realized.

 

We cannot be assured that all of the goals of the reorganization will be achievable, particularly as the achievement of the benefits are in many important respects subject to factors that we do not control. These factors would include such things as the reactions of third parties with whom we enter into contracts and do business and the reactions of investors, analysts and U.K. and U.S. taxing authorities.

 

While we expect the reorganization will enable us to continue to take advantage of lower U.K. tax rates and the benefits of the U.K. dividend exemption system for certain non-U.K. source dividends repatriated to the U.K. in the years after implementation of the reorganization to a greater extent than would likely have been available if the reorganization was not completed, these benefits may not be achieved. In particular, U.K. or U.S. tax authorities may challenge our application and/or interpretation of relevant tax laws, regulations or treaties, valuations and methodologies or other supporting documentation, and, if they are successful in doing so, we may not experience the level of benefits we anticipate; or, we may be subject to adverse tax consequences. Even if we are successful in maintaining our positions, we may incur significant expense in contesting positions asserted or claims made by tax authorities.

Our effective tax rates and the benefits described herein are also subject to a variety of other factors, many of which are beyond our ability to control, such as changes in the rate of economic growth in the U.K. and the U.S., the financial performance of our business in various jurisdictions, currency exchange rate fluctuations (especially as between the British pound and the U.S. dollar), and significant changes in trade, monetary or fiscal policies of the U.K. or the U.S., including changes in interest rates. The impact of these factors, individually and in the aggregate, is difficult to predict, in part because the occurrence of the events or circumstances described in such factors may be (and, in fact, often seem to be) interrelated, and the impact to us of the occurrence of any one of these events or circumstances could be compounded or, alternatively, reduced, offset, or more than offset, by the occurrence of one or more of the other events or circumstances described in such factors.

 

Following the effective time of the merger, it is likely that we will be removed from the S&P 500 stock index and other indices, which could have an adverse impact on our share price.

 

Our shares currently are a component of the Standard & Poor’s 500 Index and other indices. Based on current S&P guidelines, we believe it is likely that the S&P would remove our shares (or refuse to include the ADSs after the effective time of the merger) as a component of the S&P 500 upon the effectiveness of the merger. Although we are uncertain as to when the S&P would take this action, we do not believe that it would be effective until after the special meeting of stockholders described in this proxy statement/prospectus. The S&P has removed the shares of other companies that recently reincorporated to European jurisdictions whether through a continuation, scheme of arrangement, merger transaction similar to the type of merger transaction described in this proxy statement (prospectus) or otherwise.

 

Similar issues could arise with respect to whether the ADSs will be included as a component in other indices or funds that impose a variety of qualifications that could be affected by the merger. If the ADSs are not included as a component of the S&P 500 or other indices or no longer meet the qualifications of such funds, institutional investors that are required to track the performance of the S&P 500 or such other indices or the funds that impose those qualifications would be required to sell their ADSs which could adversely affect the price of the ADSs. Any such adverse impact on the price of our shares could be magnified by the current heightened volatility in the financial markets.

 

Your rights as a stockholder of Ensco Delaware will change as a result of the merger in a manner that may be less favorable to you.

 

The consummation of the merger will change the governing law that applies to our stockholders from Delaware law (which applies to common shares of Ensco Delaware) to English law (which applies to the Class A Ordinary Shares) and New York contract law (which applies under the deposit agreement). Some of the principal attributes of the common stock of Ensco Delaware and the Class A Ordinary Shares will be similar. There are, however, several significant differences between the rights of stockholders under Delaware law and shareholders under English law, and there are differences between our current certificate of incorporation and bylaws and the proposed articles of association that will apply to our stockholders after the consummation of the merger through the ADS arrangements contemplated by the deposit agreement. For a detailed discussion of these differences, see “Comparison of Rights of Stockholders/Shareholders.”

 

The enforcement of civil liabilities against Ensco UK may be more difficult.

 

Because Ensco UK will be a public limited company incorporated under English law, after the effective time of the merger investors could experience more difficulty enforcing judgments obtained against Ensco UK in U.S. courts than would currently be the case for U.S. judgments obtained against Ensco Delaware. In addition, it may be more difficult (or impossible) to bring some types of claims against Ensco UK in courts in England than it would be to bring similar claims against a U.S. company in a U.S. court.

The market for ADSs representing Class A Ordinary Shares may differ from the current market for Ensco Delaware shares.

 

Although it is anticipated that the ADSs will be authorized for listing on the NYSE under the symbol “ESV,” which is the same symbol under which shares of Ensco Delaware are currently listed, the market prices, trading volume and volatility of the ADSs could be different from those of the Ensco Delaware shares.

 

The value of ADSs that you may be entitled to receive in the merger depends on the market price of the Ensco Delaware shares before the merger and of the ADSs at the effective time of the merger.

 

The number of ADSs that you will be entitled to receive in the merger in exchange for the Ensco Delaware common stock you own is fixed at one ADS per common share of Ensco Delaware. Because the market price of the Ensco Delaware common stock will fluctuate from the date hereof until the effective time of the merger, the value at the time of the completion of the merger of the ADSs that you receive will depend on the market price of the Ensco Delaware common stock at that time. There can be no assurance as to the market value of the common shares of Ensco Delaware at the effective time of the merger. Therefore, there can be no assurance as to the market value of any ADSs that you receive.

 

We expect to incur transaction costs in connection with the completion of the reorganization, some of which will be incurred whether or not the reorganization is completed.

 

We have begun to incur and expect to incur in 2009 and 2010 a total of up to approximately $7.0 million in transaction costs in connection with the reorganization. The substantial majority of these costs will be incurred regardless of whether the reorganization is completed and prior to your vote on the proposal.

 

Following the merger and in connection with the reorganization, we plan to engage in several transactions that will result in the reorganization of Ensco Delaware and certain of its subsidiaries. Ensco Delaware will likely recognize gain, and be subject to U.S. federal income tax on such gain, as a result of certain of these transactions. The amount of income taxes incurred in connection with these transactions will depend on a number of factors. Based on information currently available, we do not expect these transactions to have a significant impact on our reported income tax expense.

 

In connection with the completion of the reorganization, we will reevaluate the ability to realize or utilize our deferred tax assets related to U.S. operations under the new Ensco UK corporate structure and we may recognize a non-cash, deferred tax expense upon the conclusion of this evaluation. Based on information currently available, we do not expect the additional deferred tax expense to be significant.

 

As a result of increased shareholder approval requirements, we may have less flexibility as a U.K. public limited company than as a Delaware corporation with respect to certain aspects of capital management.

 

Under Delaware law, our directors may issue, without further shareholder approval, any shares authorized in our certificate of incorporation that are not already issued or reserved. Delaware law also provides substantial flexibility in establishing the terms of preferred shares. However, English law provides that a board of directors may only allot shares with the prior authorization of shareholders, such authorization being up to the aggregate nominal amount of shares and for a maximum period of five years, each as specified in the articles of association or relevant shareholder resolution. This authorization would need to be renewed by our shareholders upon its expiration (i.e., at least every five years). We anticipate that an ordinary resolution will be adopted prior to the effective time of the merger to authorize the allotment of additional shares, and renewal of such authorization for additional five year terms may be sought more frequently. See “Description of Class A Ordinary Shares of Ensco UK — Preemptive Rights and New Issues of Shares.”

 

English law also generally provides shareholders with preemptive rights when new shares are issued for cash; however, it is possible for the articles of association, or shareholders in general meeting, to exclude preemptive rights. Such an exclusion of preemptive rights may be for a maximum period of up to five years from the date of adoption of the articles of association, if the exclusion is contained in the articles of association, or from the date of the shareholder resolution, if the exclusion is by shareholder resolution; in either case, this exclusion would need to

be renewed upon its expiration (i.e., at least every five years). We anticipate that a special resolution will be adopted to exclude preemptive rights prior to the effective time of the merger, and renewal of such exclusion for additional five year terms may be sought more frequently. See “Description of Class A Ordinary Shares of Ensco UK — Preemptive Rights and New Issues of Shares.”

 

English law also generally prohibits a company from repurchasing its own shares by way of “off market purchases” without the prior approval of 75 percent of shareholders by special resolution. Such approval lasts for a maximum period of up to five years. English law prohibits Ensco UK from conducting “on market purchases” as its shares will not be traded on a recognized investment exchange in the U.K. We anticipate that a special resolution will be adopted to permit “off market purchases” prior to the effective time of the merger. See “Description of Class A Ordinary shares of Ensco UK — Alteration of Share Capital/Repurchase of Shares.” This special resolution will need to be renewed upon expiration (i.e., at least every five years) but may be sought more frequently for additional five year terms.

 

We cannot assure you that situations will not arise where such shareholder approval requirements for any of these actions would deprive our shareholders of substantial benefits.

 

The reorganization will result in additional ongoing costs to us.

 

The completion of the reorganization will result in an increase in some of our ongoing expenses and require us to incur some new expenses. Some costs, including those related to employees in our U.K. offices and holding board meetings in the U.K., are expected to be higher than would be the case if our principal executive offices were not relocated to England. We also expect to incur new expenses, including professional fees, to comply with U.K. corporate and tax laws.

 

Negative publicity resulting from the proposed merger could adversely affect our business and our stock price.

 

Foreign reincorporations like the proposed merger that have been undertaken by other companies have generated significant press coverage, much of which has been negative. Negative publicity generated by the proposed merger could cause some of our customers or suppliers to be more reluctant to do business with us. This could have an adverse impact on our business. Negative publicity could also cause some of our stockholders to sell our stock or decrease the demand for new investors to purchase our stock, which could have an adverse impact on our stock price.

 

Our ability to declare dividends and repurchase shares will be more limited following the merger.

 

Under English law, with limited exceptions, Ensco UK will only be able to declare dividends, make distributions or repurchase shares out of “distributable profits.” “Distributable profits” are a company’s accumulated, realized profits, so far as not previously utilized by distribution or capitalization, less its accumulated, realized losses, so far as not previously written off in a reduction or reorganization of capital duly made. Immediately after the merger, Ensco UK will not have “distributable profits.” It is expected that, subject to the risk factors discussed in this section and in Part I, Item 1A “Risk Factors” of our 2008 Form 10-K and to the factors discussed in “Forward-Looking Statements” above, Ensco UK will have income from continuing operations following the merger sufficient to accumulate “distributable profits” in an amount sufficient to continue paying quarterly dividends at a rate of $0.025 per share on the anticipated schedule for the foreseeable future and to continue our repurchases of shares from employees in connection with the settlement of income tax withholding obligations arising from the vesting of share awards. However, unless we were to cause Ensco Delaware to declare a dividend payable indirectly to Ensco UK and pay the associated withholding taxes, Ensco UK would not initially have “distributable profits” sufficient to fully implement our previously disclosed board of directors authorization to repurchase up to $562.0 million of our shares.

 

The following includes a brief summary of the material provisions of the merger agreement, a copy of which is attached as Annex A and incorporated by reference into this proxy statement/prospectus. We encourage you to read the merger agreement in its entirety for a more complete description of the merger. In the event of any discrepancy between the terms of the merger agreement and the following summary, the merger agreement will control.

 

The merger agreement you are being asked to adopt at the special meeting provides for a merger that would result in your shares of Ensco Delaware common stock being converted into the right to receive ADSs representing Class A Ordinary Shares of Ensco UK which will be, at the effective time of the merger, a public limited company incorporated under English law. Ensco UK, together with its subsidiaries, will thereafter own and continue to conduct our business in substantially the same manner as is currently being conducted by Ensco Delaware and its subsidiaries. Immediately following the merger, you will have the right to own an interest in Ensco UK (i.e., a right to receive ADSs representing the Class A Ordinary Shares of Ensco UK), which will be managed by the same board of directors and executive officers that manage Ensco Delaware immediately prior to the merger. Additionally, the consolidated assets and business of Ensco UK will be the same as those of Ensco Delaware immediately prior to the merger.

 

Under the merger agreement, Ensco Mergeco, a wholly-owned subsidiary of Ensco Cayman (which itself is currently a wholly-owned subsidiary of Ensco Delaware) will merge with and into Ensco Delaware, with Ensco Delaware surviving the merger as a wholly-owned subsidiary of Ensco Cayman. If the merger agreement is adopted by the stockholders, we anticipate that the merger will become effective shortly after such approval. We currently anticipate that the merger will become effective at 12:01 a.m., Eastern Standard Time, on December 23, 2009, and the subsequent actions will commence thereafter.

 

Ensco Delaware is an international offshore contract drilling company. We are one of the leading providers of offshore contract drilling services to the international oil and gas industry. Our operations are concentrated in the geographic regions of Asia Pacific (which includes Asia, the Middle East, Australia and New Zealand), Europe/Africa and North and South America. We have assembled one of the largest and most capable offshore drilling rig fleets in the world. We have grown our fleet through corporate acquisitions, rig acquisitions and new rig construction. We were formed as a Texas corporation in 1975 and were reincorporated in Delaware in 1987.

 

Ensco Mergeco is a Delaware limited liability company and currently a wholly-owned subsidiary of Ensco Cayman, which is a newly formed Cayman Islands exempted company and currently is a wholly-owned subsidiary of Ensco Delaware. Neither Ensco Cayman nor Ensco Mergeco has a significant amount of assets or liabilities and neither has engaged in any business since its formation other than activities associated with its anticipated participation in the reorganization.

 

The principal executive offices of Ensco Delaware and Ensco Mergeco in the U.S. are currently located at 500 North Akard Street, Suite 4300, Dallas, Texas 75201-3331, U.S.A., and the telephone number of each company is (214) 397-3000.

 

The principal executive offices of Ensco UK are currently located at ENSCO House, Badentoy Avenue, Badentoy Industrial Estate, Aberdeen, AB12 4YB, Scotland, and the telephone number is +44 (1224) 780 400. We expect to move the principal executive offices of Ensco UK to a location in England in connection with the merger and the subsequent actions.

 

The principal executive offices of Ensco Cayman are currently located at Maples Corporate Services Limited, PO Box 309, Ugland House, South Church Street, George Town, Grand Cayman, KY1-1104, Cayman Islands, and the telephone number is +1 345 949 8066.

 

The merger is part of a reorganization of Ensco’s corporate structure, which includes a change of our place of incorporation from Delaware to England and the relocation of our principal executive offices to England. We expect that the reorganization will, among other things, establish a corporate headquarters in the U.K. where we already have substantial operations and which is more centrally located within our area of worldwide operations, locate us in a country with a stable and developed legal regime with established standards of corporate governance, including provisions for the rights of shareholders, and a favorable tax regime that should improve our ability to maintain a competitive worldwide effective corporate tax rate, among other anticipated benefits. In that regard, we expect that the reorganization will also result in operational and administrative efficiencies over the long term and enhance our ability to expand in the U.K., Europe and internationally.

 

 

 

In approving the merger, our Board was cognizant of and considered a variety of negative or potentially negative factors, including the fact that we expect to incur costs to complete the reorganization and establish a corporate office in the U.K., the fact that the cost to maintain a corporate office in the U.K. is expected to exceed the cost that would have been incurred to maintain a similar corporate office in the U.S., and the fact that the expected benefits of the reorganization may not be realized for a variety of reasons, including as a result of taxing authorities disagreeing with our conclusions on tax treatment or changing applicable tax laws and regulations with potentially retroactive effect.

 

In the course of its review of the reorganization and its attendant risks, our Board engaged in discussions with management and external advisors to evaluate potentially negative consequences of the reorganization. After completing its process of review of the expected benefits and potential risks, the Board determined that the reorganization was in the best interests of Ensco Delaware and its stockholders as the expected benefits of the reorganization outweighed the risks. Please see “Forward-Looking Statements” and “Risk Factors” for further discussion of the negative and potentially negative factors discussed above and for a discussion of factors that could prevent us from achieving the benefits described above that we anticipate from completion of the reorganization.

 

The steps that have been taken to date, and that will be taken, to complete the merger are:

 

 

 

 

 

The merger agreement may be amended, modified or supplemented at any time by the parties thereto before or after it is adopted by the stockholders of Ensco Delaware. However, after adoption by the stockholders, no amendment, modification or supplement may be made or effected that requires further approval by Ensco Delaware stockholders without obtaining that approval. Further, our Board may abandon the merger at any time, including after stockholder approval.

 

The conversion of Ensco Delaware common stock into the right to receive the merger consideration will occur automatically at the effective time of the merger. The exchange agent will, as soon as reasonably practicable after the effective time of the merger, exchange certificates representing Ensco Delaware shares for the merger consideration in the form of ADSs to be received in the merger pursuant to the terms of the merger agreement. Class A Ordinary Shares have been delivered to the custodian for the ADSs and, in exchange, the depositary has issued to Ensco Delaware the ADSs that will be delivered to the stockholders of Ensco Delaware after the effective time of the merger. The ADSs will be contributed to Ensco Mergeco prior to the effective time of the merger and, following the effective time of the merger, will be delivered to the exchange agent for delivery to Ensco Delaware stockholders upon surrender of the certificates representing Ensco Delaware common stock.

 

If you are currently a beneficial holder, your ownership of ADSs will be recorded in book entry form by your broker.

 

If you hold Ensco Delaware stock certificates, soon after the effective time of the merger, you will be sent a letter of transmittal, which is to be used to surrender your Ensco Delaware stock certificates and to request that ADSs be issued to you. The letter of transmittal will contain instructions explaining the procedure for surrendering Ensco Delaware stock certificates and receiving ADSs. YOU SHOULD NOT RETURN STOCK CERTIFICATES WITH THE ENCLOSED PROXY CARD. If a certificate for Ensco Delaware common stock has been lost, stolen or destroyed, the exchange agent will issue the merger consideration properly deliverable under the merger agreement upon compliance by the applicable stockholder with the replacement requirements established by the exchange agent.

 

Until Ensco Delaware stock certificates or book-entry shares are surrendered for exchange, any dividends or other distributions of Ensco UK declared after the effective time of the merger with respect to ADSs will accrue but will not be paid. Ensco UK will pay to former Ensco Delaware stockholders any unpaid dividends or other distributions, without interest, only after they have duly surrendered their Ensco Delaware stock certificates or book-entry shares. After the effective time of the merger, there will be no transfers on the stock transfer books of Ensco Delaware of any Ensco Delaware shares. If stock certificates representing Ensco Delaware shares are presented for transfer after the completion of the merger, they will be cancelled and exchanged for the merger consideration into which the Ensco Delaware shares represented by that certificate have been converted.

 

The exchange agent will be entitled to deduct and withhold from the merger consideration payable to any Ensco Delaware stockholder the amounts it is required to deduct and withhold under the Code or any provision of any state, local or foreign tax law. If the exchange agent withholds any amounts, these amounts will be treated for all purposes of the merger as having been paid to the stockholders from whom they were withheld.

 

The merger is part of a reorganization of Ensco Delaware’s corporate structure. Promptly following the consummation of the merger, Ensco UK, as Ensco Delaware’s new parent company, expects to commence additional transactions related to its corporate structure that will result in the reorganization of Ensco Delaware and certain of Ensco UK’s subsidiaries and their respective assets, in order to achieve the benefits of the reorganization described above under “— Background and Reasons for the Merger.” In connection with these subsequent actions, we may also be required to redeem, repurchase or repay our 4.65% Bonds due 2020 and our 6.36% Bonds due 2015, and pay a make-whole premium, to the extent that certain consents or approvals are not obtained from the United States Maritime Administration on a timely basis. As of October 31, 2009, these bonds had an aggregate principal amount outstanding of $131.8 million and the make-whole premium would have been approximately $17.5 million. We do not expect any actions to be required with respect to our 7.20% Debentures due 2027, which have an aggregate principal amount outstanding of $150.0 million as of October 31, 2009, but may enter into supplemental indentures as necessary or advisable to provide for guarantees or assumption of debt by Ensco UK or certain of its subsidiaries in connection with certain subsequent actions. Refer to “Forward-Looking Statements” and “Risk Factors” above for a description of certain risks associated with the reorganization.

 

Pursuant to the merger agreement, the Board may exercise its discretion to terminate the merger agreement, and therefore abandon the reorganization, at any time, including after stockholder approval. Please see “Risk Factors — Our Board may choose to defer or abandon the merger at any time.”

 

The “Comparison of Rights of Stockholders/Shareholders — Indemnification of Directors and Officers” sets out the position under English law in relation to director and officer liability and indemnification. We expect to enter into new indemnity agreements and deeds of indemnity with directors, executive officers and certain other officers and employees (including directors, officers and employees of subsidiaries and other affiliates). These indemnification agreements and deeds of indemnity will require that Ensco UK and Ensco Delaware indemnify and hold harmless such persons, to the fullest extent permitted by applicable law, against all losses suffered or incurred by him or her which arise in connection with his or her appointment as a director or officer, as applicable, an act done in connection with his or her performance of his or her functions as a director or officer or an official investigation ordered into the affairs of the company of which he or she is serving as a director or officer at the request of the indemnifying company. Ensco Delaware also intends to amend its bylaws to provide similar indemnification rights to such persons. However, the Companies Act prohibits an English company from indemnifying directors and certain officers in particular circumstances which are set out in the relevant indemnity agreements and generally summarized in the “Comparison of Rights of Stockholders/Shareholders — Indemnification of Directors and Officers.”

 

The reorganization is not intended to constitute a change in control for purposes of Ensco Delaware’s equity incentive plans and change in control severance agreements. We have amended and/or intend to amend the equity incentive plans, change in control severance agreements and certain other plans and agreements, as necessary or advisable and to the extent permitted, to provide that any outstanding equity award is converted into rights to ADSs on an equivalent one-share to one-ADS basis as of the effective time of the merger and to provide that the reorganization will not constitute a change in control under the terms of the applicable plans or agreements. Please see below “— Stock Compensation and Benefit Plans and Programs.”

 

We have a $350 million unsecured revolving credit facility with a syndicate of lenders for general corporate purposes. The credit facility has a five-year term, which will expire in June 2010. As of the date of this proxy statement/prospectus, there were no amounts outstanding under the credit facility. In connection with the merger and subsequent reorganization, we expect to amend certain provisions of the credit facility. If we are unsuccessful in amending the credit facility after the effective time of the merger, we may be in breach of certain provisions of the credit facility.

 

Unless, among other things, the following conditions or requirements are satisfied or, if allowed by law, waived, the merger, and therefore the reorganization, will not be completed:

 

 

Our Board does not intend to waive (where capable of waiver) any of these conditions or requirements unless it determines that the merger is in the best interests of Ensco Delaware and our stockholders, despite the condition(s) not being satisfied in whole or in part. Additionally, our Board reserves the right to defer or abandon the merger at any time, including after stockholder approval, for the reasons described under “Risk Factors — Our Board may choose to defer or abandon the merger at any time.”

 

We have a variety of equity incentive plans, compensation plans, and other plans, agreements, awards and arrangements outstanding that provide for options, restricted shares or other rights to purchase or receive shares of Ensco Delaware (or the right to receive benefits or amounts by reference to those shares). We refer to these plans, agreements, awards and arrangements as our equity incentive plans. As part of the merger, Ensco UK will assume and adopt Ensco Delaware’s rights and obligations under the equity incentive plans, all as of the effective time of the merger, except that Ensco Delaware will remain the plan sponsor of certain equity incentive plans (as further described in the merger agreement). The equity incentive plans and certain other plans and agreements have been and/or will be amended or modified (i) to facilitate the assumption and adoption by Ensco UK of the applicable equity incentive plans and the various rights, duties or obligations thereunder, (ii) to the extent required to reflect the issuance of rights over ADSs (rather than rights over Ensco Delaware shares), (iii) to provide for the appropriate substitution of Ensco UK in place of Ensco Delaware where applicable, (iv) to provide that the merger will not

constitute a change in control under the terms of the equity incentive plans, change in control severance agreements and certain other plans and agreements to the extent permitted or applicable, and (v) to comply with applicable English or U.S. corporate or tax law requirements. Stockholder approval of the adoption of the merger agreement will also constitute stockholder approval of the adoption and assumption of the equity incentive plans by Ensco UK as contemplated by this proxy statement/prospectus. Equity incentive plans that provide benefits to employees and directors of Ensco Delaware and its subsidiaries will, if applicable, upon being assumed by Ensco UK, continue to provide benefits to such employees or directors consistent with the current manner, subject to the limitations set forth in the relevant plan, as such plan may be amended from time to time. To the extent that awards of restricted stock or similar restricted share rights are granted following the effective time of the merger, the holder may be obligated to pay the nominal or par value to receive the ADSs due to English corporate law requirements.

 

At the effective time of the merger, all outstanding options to purchase shares of Ensco Delaware common stock granted or issued prior to the effective time of the merger, and all outstanding shares of restricted stock of Ensco Delaware and other equity-based awards awarded under our equity incentive plans, will entitle the holder to purchase or receive, or receive benefits or amounts based on, as applicable, an equal number of ADSs. All of such stock options, restricted stock and other equity-based awards will be subject to the same terms and conditions as were applicable to such awards granted or issued by Ensco Delaware immediately prior to the effective time of the merger other than as discussed above.

 

Holders of outstanding nonqualified options, awards of restricted stock or other equity-based awards, as well as beneficial owners of Ensco Delaware shares acquired under the ENSCO Savings Plan, the Multinational Savings Plan and potentially certain other plans, other than U.S. taxpayers who perform all of their services within the U.S., may be subject to tax as a result of the conversion of the underlying shares of Ensco Delaware common stock to ADSs, depending on the country where the holders are citizens or tax residents or the country where they resided during the life of such equity awards of Ensco Delaware. However, holders of outstanding nonqualified options, awards of restricted stock and beneficial ownership of Ensco Delaware shares acquired under the ENSCO Savings Plan who are U.S. taxpayers should not recognize taxable gain for U.S. income tax purposes as a result of the conversion. Tax withholding and/or reporting may be required by the Company or one of its affiliates and/or the holder of the applicable equity award, and certain employer social insurance contributions or other taxes may be due as a result of the conversion of the equity awards from Ensco Delaware awards to ADS awards. Depending on the country where the holders are citizens or residents or the country where they resided during the life of the Ensco Delaware awards, it is also possible that the conversion of equity awards will trigger certain regulatory filings or notices to employees concerning the tax consequences.

 

We anticipate that the merger will become effective at 12:01 a.m., Eastern Standard Time, on December 23, 2009 and that the subsequent actions will promptly commence thereafter. Our Board will have the right, however, to defer or abandon the merger at any time, including after stockholder approval, if it concludes that completion of the reorganization would not be in the best interests of Ensco Delaware or our stockholders.

 

Immediately prior to the effective time of the merger, the directors and executive officers of Ensco UK will be the same as the then-current directors and executive officers of Ensco Delaware, and the directors within each class of directors as currently in effect with respect to Ensco Delaware will be directors of the corresponding class of directors with respect to Ensco UK. If the merger is completed, the members of the Ensco UK board of directors, or the “Ensco UK Board,” will serve until the earlier of the next meeting of shareholders at which an election of their respective class of directors is required or until their successors are elected, and the executive officers will serve until their successors are elected or earlier death, disability or retirement.

 

The affirmative vote of the holders of a majority of the outstanding shares of Ensco Delaware common stock entitled to vote at the special meeting is required to approve the proposal to adopt the merger agreement. Our Board

believes that the reorganization, to be effected by the merger agreement and subsequent actions, is advisable and in the best interests of Ensco Delaware and our stockholders. ACCORDINGLY, OUR BOARD HAS UNANIMOUSLY APPROVED THE REORGANIZATION AND THE MERGER AGREEMENT. OUR BOARD RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE ADOPTION OF THE MERGER AGREEMENT.

 

The only governmental or regulatory approvals or actions that are required to complete the merger are compliance with U.S. federal and state securities laws, the NYSE rules and regulations, U.K. securities laws and Delaware and English company law (including the filing with the Secretary of State of the State of Delaware of a certificate of merger).

 

Under the DGCL, you will not have appraisal rights in connection with the merger because, among other reasons, the ADSs you have a right to receive in the merger will be listed on the NYSE.

 

There are numerous differences between the rights of a stockholder in Ensco Delaware, a Delaware corporation, and the rights of a holder of ADSs representing Class A Ordinary Shares of Ensco UK, a company incorporated under English law. The characteristics of and the differences between Ensco Delaware common stock, the Class A Ordinary Shares and ADSs representing Class A Ordinary Shares are summarized under “Description of American Depositary Shares of Ensco UK” and “Description of the Class A Ordinary Shares of Ensco UK” and “Comparison of Rights of Stockholders/Shareholders.”

 

Ensco Delaware common stock is currently listed on the NYSE under the symbol “ESV.” There is currently no established public trading market for the Class A Ordinary Shares or ADSs representing shares of Ensco UK. However, it is a condition to the completion of the merger that the ADSs will be authorized for listing on the NYSE, subject to official notice of issuance and satisfaction of other standard conditions. As such, we expect that as of the effective time of the merger, the ADSs will be authorized for listing on the NYSE, and we expect such ADSs will be listed on the NYSE under the symbol “ESV.”

 

The following table sets forth the quarterly cash dividends paid per share of Ensco Delaware common stock in the periods indicated.

 

 

On November 3, 2009, the Board declared a dividend of $0.025 per share to be paid on December 18, 2009, to shareholders of record on December 7, 2009. The Ensco UK Board currently intends to declare quarterly dividends out of current earnings, if appropriate in view of its profitability, liquidity, financial condition, reinvestment opportunities and capital requirements. Ensco UK will initially adopt Ensco Delaware’s prior practice with respect to dividends, which has been to pay quarterly cash dividends on our common stock since the third quarter of 1997, subject to the discretion of the board of directors. Following completion of the merger, as part of an overall review of capital allocation activities, Ensco UK will evaluate both its dividend and share repurchase policies. We expect that Ensco UK would make quarterly dividends after the completion of this review. Notwithstanding the foregoing, the declaration and payment of all future dividends and any share repurchases will remain subject to the discretion of Ensco UK’s Board and the limitations set forth in the Companies Act, which generally provide that dividends, distributions and share repurchases may only be made out of distributable profits. “See Risk Factors — Our ability to declare dividends and repurchase shares will be more limited following the merger.”

 

Historical cost basis accounting, rather than acquisition method accounting, will be applied to the merger. Given that, for accounting purposes, there will be no change in control and Ensco Delaware’s stockholders will be in the same economic position immediately before and after the reorganization, and because the reorganization will be accounted for as an internal reorganization of entities under common control, there will be no revaluation of Ensco Delaware’s assets and liabilities.

 

We do not believe that, after the completion of the reorganization, Ensco UK will be classified as a “foreign private issuer” within the meaning of the rules promulgated under the Exchange Act. The definition of a “foreign private issuer” has two parts — one based on a company’s percentage of U.S. resident shareholders and the other on its business contacts with the U.S. An organization incorporated under the laws of a country outside the U.S. qualifies as a foreign private issuer unless both parts of the definition are satisfied as of the last business day of its most recently completed second fiscal quarter.

 

The shareholder test requires more than 50 percent of the outstanding voting securities of a non-U.S. domiciled organization to be held by non-U.S. residents. We currently expect that Ensco UK will meet the shareholder test

upon the completion of the reorganization because we understand that more than 50 percent of our outstanding voting securities are held by U.S. residents.

 

The business contacts test requires that any of the following be true with respect to a non-U.S. domiciled organization: (i) the majority of its executive officers or directors are U.S. citizens or residents; (ii) more than 50 percent of its assets are located in the U.S.; or (iii) its business is administered principally in the U.S. We currently expect that Ensco UK will meet the business contacts test upon the completion of the reorganization. However, Ensco UK could fail to satisfy either test at some time in the future and, as a result, qualify for status as a foreign private issuer. If that occurs, Ensco UK would be exempt from certain requirements applicable to U.S. public companies, including, among others:

 

MATERIAL TAX CONSIDERATIONS RELATING TO THE MERGER

 

This section contains a general discussion of certain material tax consequences of (1) the merger, (2) post-merger ownership and disposition of ADSs and (3) post-merger operations of Ensco UK.

 

The discussion under the caption “— U.S. Federal Income Tax Considerations” addresses (1) application of the U.S. anti-inversion rules to Ensco Delaware, Ensco UK and the exchanging holders, (2) the material U.S. federal income tax consequences of the merger to Ensco Delaware and to Ensco UK, and (3) the material U.S. federal income tax consequences to U.S. holders and non-U.S. holders (each as defined below) of (a) exchanging Ensco Delaware shares for ADSs in the merger and (b) owning and disposing of ADSs received in the merger.

 

The discussion of the merger and of ownership and disposition of ADSs received in the merger under the caption “— U.K. Tax Considerations” addresses the material U.K. tax consequences to stockholders of Ensco Delaware resident for tax purposes in the U.K. and in a country other than the U.K. It also addresses certain U.K. tax considerations of the merger and subsequent operations for Ensco UK and Ensco Delaware.

 

The discussion below is not a substitute for an individual analysis of the tax consequences of the merger, post-merger ownership and disposition of ADSs or post-merger operations of Ensco UK. You should consult your own tax advisor regarding the particular U.S. (federal, state and local), U.K. and other non-U.S. tax consequences of these matters in light of your particular situation.

 

This discussion generally does not address any aspects of U.S. taxation other than U.S. federal income taxation, is not a complete analysis or listing of all potential tax consequences of the merger or of holding and disposing of ADSs, and does not address all tax considerations that may be relevant to Ensco Delaware shareholders. In particular, the discussion below addresses tax consequences to those who hold their Ensco Delaware shares, and who will hold their ADSs, solely as capital assets, which is the opinion of our external counsel. The discussion below does not address any tax consequences to Ensco Delaware or Ensco UK shareholders, as applicable, who, for U.S. federal tax purposes, are subject to special rules, such as:

 

 

This discussion is based on the Code, the Treasury regulations promulgated thereunder, or the “Treasury Regulations,” judicial and administrative interpretations thereof and the Convention Between the United States of

America and the United Kingdom for the Avoidance of Double Taxation with respect to Taxes on Income, or the “U.K.-U.S. Tax Treaty,” in each case as in effect and available on the date of this proxy statement/prospectus. Each of the foregoing is subject to change, which change could apply with retroactive effect and could affect the tax consequences described in this proxy statement/prospectus. Neither Ensco Delaware nor Ensco UK will request a ruling from the IRS as to the U.S. federal tax consequences of the merger, post-merger ownership and disposition of ADSs or any other matter. There can be no assurance that the IRS will not challenge any of the U.S. federal tax consequences described below.

 

For purposes of this discussion, a “U.S. holder” is a beneficial owner of Ensco Delaware shares or, after the completion of the merger, ADSs, that for U.S. federal income tax purposes is:

 

 

A “non-U.S. holder” is a beneficial owner of Ensco Delaware shares or, after the completion of the merger, ADSs, other than a U.S. holder or an entity or arrangement treated as a partnership for U.S. federal income tax purposes, or a “Partnership.” If a Partnership is a beneficial owner of Ensco Delaware shares or ADSs, the tax treatment of a partner in that Partnership will generally depend on the status of the partner and the activities of the Partnership. Holders of Ensco Delaware shares or ADSs that are Partnerships and partners in such Partnerships should consult their tax advisors regarding the U.S. federal income tax consequences to them of the merger and the ownership and disposition of ADSs. For purposes of this discussion, “holder” or “shareholder” means either a U.S. holder or a non-U.S. holder or both, as the context may require.

 

For U.S. federal income tax purposes, the conversion of each issued and outstanding share of the common stock of Ensco Delaware into the right to receive an ADS upon the consummation of the merger generally will be treated as an exchange of such share for the ADS. Therefore, the U.S. federal income tax discussion contained herein refers to an “exchange” rather than a “conversion” in describing the U.S. federal income tax consequences of the merger.

 

Although Ensco UK is incorporated in the U.K., the IRS may assert that Ensco UK should be treated as a U.S. corporation (and, therefore, a U.S. tax resident) for U.S. federal income tax purposes under Section 7874 of the Code. At the time of enactment of Section 7874 in 2004, a number of publicly-traded U.S. multinational corporations had expatriated to non-U.S. jurisdictions. In most cases, those corporations expatriated to tax haven jurisdictions in which the applicable U.S. multinational corporation had no (or minimal) historic business activities. As a general matter, absent the application of Section 7874, a corporation is considered, for U.S. federal income tax purposes, to be a tax resident of the jurisdiction in which it is incorporated.

 

Under Section 7874, a corporation created or organized outside the U.S. will be treated as a U.S. corporation for U.S. federal income tax purposes, when (i) the foreign corporation directly or indirectly acquires substantially all of the assets held directly or indirectly by a U.S. corporation, (ii) the shareholders of the acquired U.S. corporation hold at least 80 percent of the vote or value of the shares of the foreign acquiring corporation by reason of holding stock in the U.S. acquired corporation, and (iii) the foreign corporation’s “expanded affiliated group” does not have substantial business activities in the foreign corporation’s country of incorporation relative to its expanded affiliated group’s worldwide activities. Solely for purposes of Section 7874, “expanded affiliated group” means the foreign corporation and all subsidiaries in which the foreign corporation, directly or indirectly, owns more than 50 percent of the stock by vote and value.

Ensco UK will indirectly acquire all of the assets of Ensco Delaware, and the former shareholders of Ensco Delaware will acquire, as a result of the merger, 100 percent of the stock in Ensco UK by reason of holding stock in Ensco Delaware. After the merger, however, the Ensco UK expanded affiliated group intends to continue the substantial business activities in the U.K. that the Ensco Delaware expanded affiliated group currently conducts. Therefore, Ensco UK should not be treated as a U.S. corporation for U.S. federal income tax purposes.

 

Section 7874 does not define the term “substantial business activities” or otherwise quantify the activities that the foreign corporation and its expanded affiliated group should have in the foreign corporation’s country of incorporation. Temporary Treasury Regulations issued under section 7874 of the Code in June 2009, or the “2009 Regulations,” also decline to define or quantify “substantial business activities.” Rather, the 2009 Regulations provide that whether a foreign corporation’s expanded affiliated group has substantial business activities in the foreign corporation’s country of organization in relation to its worldwide activities is based on all facts and circumstances. The 2009 Regulations provide that relevant items to be considered in determining whether an expanded affiliated group has substantial business activities in a foreign country when compared to the total activities of the expanded affiliated group include, but are not limited to, the following:

 

 

 

 

 

 

 

 

The 2009 Regulations further provide that the presence or absence of any of the above items is not determinative, and the weight given to any item depends on the facts and circumstances. Former temporary Treasury Regulations, or the “2006 Regulations” contained a “safe harbor” that focused solely on the items listed in (iii) above. The “safe harbor” tested whether the percentage of each such item in the foreign corporation’s country of incorporation equaled or exceeded 10 percent of such item worldwide over a single calendar year. Thus, under the 2006 Regulations, a foreign corporation was generally deemed to meet the substantial business activities test “safe harbor” if the relevant assets, employees and revenues of the expanded affiliated group in the foreign corporation’s country of incorporation constituted at least 10 percent of the expanded affiliated group’s worldwide assets, employees and revenues, respectively. The ratios of the Ensco Delaware expanded affiliated group’s assets, employees and revenues in the U.K. compared to its worldwide assets, employees and revenues exceeded the former 10 percent “safe harbor” contained in the 2006 Regulations for each calendar year from 2005 through 2008 and are projected to exceed the former “safe harbor” in 2009. The 2009 Regulations contain no “safe harbor” or examples to illustrate the application of the relevant factors to determine whether substantial business activities exist. There is no judicial or administrative guidance on the meaning of “substantial business activities” for purposes of Section 7874.

 

Notwithstanding the absence of a “safe harbor” or other quantitative guidance in the 2009 Regulations, we believe that the activities the Ensco Delaware expanded affiliated group conducts in the U.K. should satisfy the substantial business activities test set forth in the 2009 Regulations. Moreover, it is a condition to closing of the merger that Ensco Delaware receives from Baker & McKenzie LLP, counsel to the Company, or “Counsel,” an

opinion of Counsel concluding that Section 7874 should not apply to the merger. Pending receipt of Counsel’s opinion, our belief that Section 7874 should not apply to the merger is based on an analysis of the relevant items listed in the 2009 Regulations, as summarized below.

 

(i) U.K. Activities Material to Overall Strategic Business Objectives

 

The Company provides offshore contract drilling services to the oil and gas industry. We have determined that we will focus the Company’s resources on premium jackup rig and ultra-deepwater semisubmersible rig operations because these businesses offer high margins, are within the Company’s core competency and we believe that demand for these services will continue to grow in coming years. We believe that a growing part of the Company’s business will continue to come from customer contracts in the North Sea, Mediterranean Sea, West Africa, the Middle East, India, Southeast Asia, Australia and New Zealand, or the “Foreign Drilling Markets.”

 

Over the past 20 years, U.S.-based major integrated oil companies and major independents have expanded outside of the U.S. Consequently, the Company performs the vast majority of its work in the Foreign Drilling Markets. This trend is driven by the fact that a large percentage of the world’s remaining hydrocarbons are located in the Foreign Drilling Markets. Specifically, 94 percent of the proven worldwide oil reserves and 95 percent of the proven worldwide gas reserves are located in the Foreign Drilling Markets. By contrast, only 6 percent of the proven worldwide oil reserves and only 5 percent of the proven worldwide gas reserves are located in the U.S. Accordingly, the Company expects the best opportunities for premium jackup rig and ultra-deepwater semisubmersible rig operations to be in the Foreign Drilling Markets. Moreover, the national oil companies, or “NOCs,” control approximately 70 percent of all proven worldwide oil and gas reserves, and all of the NOCs are headquartered in and operate outside of the U.S. These NOCs now represent Ensco’s most important customer base for the future. The U.K. is geographically positioned closer to Ensco’s customers and the most hydrocarbon-rich areas of the world.

 

Ensco Delaware’s predecessor was formed in 1975 with a primary focus on operations in the U.S. and the Gulf of Mexico. At that time, Houston and Dallas were the main centers of the oil service industry, and we derived substantially all of our revenue from U.S.-based operations. Over time, many oil service companies left Dallas to follow their customers, and today Ensco Delaware is the only major oil service company remaining in Dallas. As a result of these and other dynamics impacting the drilling industry, including the location of the world’s oil and gas reserves, Ensco Delaware and its competitors have witnessed a steady migration of offshore drilling rigs out of the U.S. Gulf of Mexico to international markets since 2000. Consistent with these global trends, we expect that we will derive approximately 86 percent of our 2009 gross revenues from our operations in the Foreign Drilling Markets.

 

Our primary goal is to continue to be a leading provider of offshore drilling services to the international oil and gas industry. In particular, the Company wishes to be a leading provider of premium jackup rig and ultra-deepwater semisubmersible rig operations in the Foreign Drilling Markets. To achieve this objective, we have determined that Ensco should relocate its principal executive offices and most of its senior executive officers to the U.K. because the U.K. is strategically closer to the Company’s customers and the Foreign Drilling Markets. This geographical proximity will allow for more efficient responses to, and meetings with, the Company’s customers because the physical distance between the Company and our customers will be much smaller. Possibly even more importantly, the time-zone differences will be smaller.

 

As a result, the Company’s assets, activities and employees (including its executive officers) in the U.K., along with the management and control of drilling contracts throughout Europe and Africa, are critically important for the Company to achieve its current and future business objectives. The reorganization will efficiently leverage the Company’s existing Europe and Africa Business Unit operations, and provide a growing hub for the Company to respond to its customers and manage its operations in the Foreign Drilling Markets.

 

(ii) Historical Conduct of Continuous Business Activities in the U.K.

 

The Ensco Delaware expanded affiliated group established its North Sea operations in Great Yarmouth, England in 1993. It has since continuously engaged in drilling activities within the U.K. The Ensco Delaware expanded affiliated group relocated its base of U.K. operations to Aberdeen, Scotland in 1994. Simultaneously with the 1994 relocation, the expanded affiliated group also established its Europe and Africa Business Unit headquarters in Aberdeen. The Europe and Africa Business Unit generated approximately 34 percent of Ensco Delaware’s worldwide revenues in 2008 and is projected to account for approximately 29 percent of worldwide revenues in

2009. For the strategic business reasons discussed above, including most importantly the location of the world’s proven oil and gas reserves and the NOCs, the Ensco Delaware expanded affiliated group’s drilling activities in the U.K. sector, in particular, and in the North Sea, in general, have steadily increased since 1993.

 

(iii) Continuous Business Activities Involving UK Property, Employees and Revenues

 

In the ordinary course of its offshore drilling business, the Ensco Delaware expanded affiliated group has been engaged in continuous and substantial business activities within the U.K. Moreover, to meet its business objectives going forward, it is strategically important that the expanded affiliated group of Ensco UK continue the conduct of continuous and substantial business activities in the U.K. As a result, we intend to continue and expand our existing business activities in the U.K.

 

Evidencing the Ensco Delaware expanded affiliated group’s substantial business activities within the U.K., the Ensco Delaware expanded affiliated group owns and operates substantial assets located in the U.K., including drilling rigs, a storage facility and supply yard, drilling equipment, spares and supplies, and office buildings that are part of our historic and continuous business activities in the U.K. Specifically, approximately 18 percent of our rig fleet is currently located in and dedicated to our North Sea operations. For these purposes, the North Sea operations include operations in the Danish and Dutch sectors of the North Sea, which are contiguous to the U.K. sector of the North Sea. North Sea assets and employees periodically and naturally migrate within the U.K., Danish and Dutch sectors of the North Sea. In general, however, our North Sea rig fleet has historically spent most of its time working in the U.K. sector of the North Sea. The Ensco Delaware expanded affiliated group also has over 400 full-time employees that perform services in the U.K.

 

With respect to revenues, the U.K. has steadily become a more important market for the Ensco Delaware expanded affiliated group over the last 6 years. As a percentage of the Ensco Delaware expanded affiliated group’s worldwide revenues, third-party customer revenues received for performing drilling services in the U.K. generally increased from 7 percent in 2003 to approximately 20 percent in 2008 and are projected to account for approximately 18 percent of the Ensco Delaware expanded affiliated group’s worldwide revenues in 2009. These percentages materially increase if revenues from contracts in the Danish and Dutch sectors of the North Sea are included. In addition, Ensco Delaware projects that the Europe and Africa Business Unit, which is managed and controlled from the U.K., will account for approximately 29 percent of its worldwide customer revenues in 2009. These percentages reflect the overall shift of Ensco Delaware’s operations to international markets, which now account for approximately 86 percent of its total revenues. This shift is also evident in the steady decline of revenue generated in the U.S., which is projected to account for only approximately 14 percent of the Ensco Delaware expanded affiliated group worldwide customer revenues in 2009, which is less than the revenues from performing drilling services in the U.K during 2009.

 

(iv) Substantial Management Activities in the U.K.

 

After relocating to Aberdeen, Scotland in 1994, the U.K. headquarters have served an increasingly important managerial role within the Ensco Delaware expanded affiliated group. The Aberdeen facility is the headquarters for the Europe and Africa Business Unit, which is one of four business operating units (largely based on geography) within the Ensco Delaware expanded affiliated group. The General Manager of the Europe and Africa Business Unit is based in Aberdeen, Scotland and manages the day-to-day operations of the Europe and Africa Business Unit. He has seven direct reports, also based in Aberdeen, who collectively assist him in managing six departments within the Europe and Africa Business Unit, namely, Finance & Administration, Marketing & Sales, Engineering, Operations, Human Resources, and Safety, Health, Environment and Quality. The General Manager and these seven direct reports actively manage and control the day-to-day operations of more than 700 personnel based in the Europe and Africa Business Unit.

 

For the strategic business reasons discussed above, management in the U.K. has grown. More importantly, for the same reasons, the Company expects this long-term historic growth of management in the U.K. to continue. The Company expects to concentrate more of its management activities in the U.K., including most of its senior executive officers. The Company has determined that it is important for these officers to be closer to the NOCs, who are the Company’s most important customers, and to the Foreign Drilling Markets where it conducts its operations. Given its strategic location and the Company’s long-term historic presence in the U.K., we have determined that

having most of our senior executive officers in the U.K. will help the Company achieve its strategic objectives, as outlined above.

 

(v) Substantial UK Investors

 

Ensco Delaware does not currently have a substantial number of shareholders resident in the U.K. (although U.K. shareholders comprise the second largest percentage of shareholders after the U.S. shareholder group). Mutual funds and institutional investors own approximately 90 percent of Ensco Delaware’s total shares. Ensco Delaware does not currently contemplate a dual listing of Ensco UK shares on the London Stock Exchange. Nevertheless, Ensco believes that it will be easier to develop relationships with potential U.K. and other European investors and grow its investor base once substantial senior management is based in the U.K. The enhanced relationships with potential U.K. and European investors are likely to result in an expanded U.K. and European Union shareholder base. However, it is unlikely that U.K. residents will comprise a substantial portion of Ensco’s shareholder base in the near term.

 

Based on the foregoing, Ensco Delaware believes that the Ensco Delaware expanded affiliated group has substantial business activities in the U.K., and as a result, Ensco UK should not be treated as a U.S. corporation for U.S. federal income tax purposes under Section 7874 of the Code following the merger. The following discussion of material U.S. federal income tax consequences related to the merger, therefore, assumes that Ensco UK will be respected as a U.K. corporation for U.S. federal income tax purposes.

 

Neither Ensco Delaware nor Ensco UK should be subject to U.S. federal income tax as a result of the merger.

 

Material Tax Consequences to U.S. Holders

 

Consequences of the Merger

 

The merger should qualify as a “reorganization” within the meaning of Section 368(a) of the Code and/or an exchange under Section 351 of the Code. However, pursuant to special rules contained in Section 367(a) of the Code and the Treasury Regulations promulgated thereunder, U.S. holders exchanging their Ensco Delaware shares for ADSs pursuant to the merger should recognize gain, if any, but not loss. In general, for U.S. federal income tax purposes, a U.S. holder should recognize gain equal to the excess of the fair market value of the ADSs received by the U.S. holder pursuant to the merger over such holder’s adjusted basis in the Ensco Delaware shares exchanged therefor. Any such gain should be capital gain, and should be long-term capital gain if the Ensco Delaware shares have been held by such holder for more than one year at the effective time of the merger. A U.S. holder that recognizes gain pursuant to the merger should have an adjusted tax basis in the ADSs it receives equal to the adjusted tax basis of the Ensco Delaware shares exchanged therefor, increased by the amount of gain recognized.

 

A U.S. holder should not be permitted to recognize any loss realized on the exchange of its Ensco Delaware shares in the merger. The adjusted tax basis of the ADSs received by a U.S. holder with a loss on its Ensco Delaware shares should be equal to such U.S. holder’s adjusted tax basis in its Ensco Delaware shares surrendered in exchange therefor. Thus, subject to any subsequent changes in the fair market value of the ADSs, any loss should be preserved.

 

In determining the amount of gain recognized, each of the Ensco Delaware shares transferred should be treated as the subject of a separate exchange. Thus, if a U.S. holder transfers some Ensco Delaware shares on which gains are realized and other Ensco Delaware shares on which losses are realized, the U.S. holder may not net the losses against the gains to determine the amount of gain recognized. The holding period for any ADSs received by U.S. holders should include the holding period of the Ensco Delaware shares exchanged therefor.

 

Cash received by a U.S. holder in exchange for a fractional share of Ensco Delaware common stock should be treated as having been received in redemption of such fractional share. Thus, gain or loss generally should be recognized by such U.S. holder in an amount equal to the difference between the amount of cash received and the U.S. holder’s adjusted tax basis in such fractional share.

Receiving Distributions on ADSs

 

Subject to the discussion below under “— Passive Foreign Investment Company Provisions,” U.S. holders will be required to include in gross income the gross amount of any distribution received on the ADSs to the extent that the distribution is paid out of Ensco UK’s current or accumulated earnings and profits as determined for U.S. federal income tax purposes. We refer to such a distribution herein as a dividend. With respect to non-corporate U.S. holders, certain dividends received in taxable years beginning before January 1, 2011 from a qualified foreign corporation will be subject to U.S. federal income tax at a maximum rate of 15 percent. As long as the ADSs are listed on the NYSE (or certain other stock exchanges) and/or Ensco UK qualifies for benefits under the U.K.-U.S. Tax Treaty, Ensco UK will be treated as a qualified foreign corporation for this purpose. This reduced rate will not be available in all situations, and U.S. holders should consult their own tax advisors regarding the application of the relevant rules to their particular circumstances. U.S. holders generally will not be eligible for dividends-received deduction with respect to dividends from Ensco UK.

 

Distributions in excess of the current and accumulated earnings and profits of Ensco UK should be applied first to reduce the U.S. holder’s tax basis in its ADSs, and thereafter should constitute gain from the sale or exchange of such shares. In the case of a non-corporate U.S. holder, the maximum U.S. federal income tax rate applicable to such “gain” is 15 percent under current law if the holder’s holding period for such ADSs exceeds twelve months. This reduced rate is scheduled to expire effective for taxable years beginning after December 31, 2010. Special rules not described herein may apply to U.S. holders who do not have a uniform tax basis and holding period in all of their ADSs, and any such U.S. holders are urged to consult their own tax advisors with regard to such rules.

 

Dispositions of ADSs

 

Subject to the discussion below under “— Passive Foreign Investment Company Provisions,” a U.S. holder of ADSs generally should recognize capital gain or loss for U.S. federal income tax purposes on the sale, exchange or other taxable disposition of ADSs in an amount equal to the difference between the amount realized from such sale, exchange or other taxable disposition and the U.S. holders’ tax basis in such shares. In the case of a non-corporate U.S. holder, the maximum U.S. federal income tax rate applicable to such gain is 15 percent under current law if the holder’s holding period for such ADSs exceeds twelve months. This reduced rate is scheduled to expire effective for taxable years beginning after December 31, 2010. The deductibility of capital losses are subject to limitations.

 

Passive Foreign Investment Company Provisions

 

The treatment of U.S. holders of ADSs in some cases could be materially different from that described above if, at any relevant time, Ensco UK were a passive foreign investment company, which we refer to as a PFIC.

 

For U.S. tax purposes, a foreign corporation is classified as a PFIC for any taxable year if either (1) 75 percent or more of its gross income is “passive income” (as defined for U.S. federal income tax purposes) or (2) the average percentage of assets held by such corporation which produce passive income or which are held for the production of passive income is at least 50 percent. For purposes of applying the tests in the preceding sentence, the foreign corporation is deemed to own its proportionate share of the assets, and to receive directly its proportionate share of the income, of any other corporation of which the foreign corporation owns, directly or indirectly, at least 25 percent by value of the stock. Ensco UK believes that it will not be a PFIC following the merger.

 

The tests for determining PFIC status are applied annually, and it is difficult to accurately predict future income and assets relevant to this determination. Accordingly, Ensco UK cannot assure U.S. holders that it will not become a PFIC. If Ensco UK should determine in the future that it is a PFIC, it will endeavor to so notify U.S. holders of ADSs, although there can be no assurance that it will be able to do so in a timely and complete manner. U.S. holders of ADSs should consult their own tax advisors about the PFIC rules, including the availability of certain elections.

Material Tax Consequences to Non-U.S. Holders

 

Consequences of the Merger

 

A non-U.S. holder generally will not be subject to U.S. federal income or withholding tax on gain realized, if any, on the exchange of Ensco Delaware shares for ADSs or on the receipt of cash in exchange for fractional shares of Ensco Delaware common stock unless: (1) such gain is effectively connected with the conduct by the non-U.S. holder of a trade or business within the U.S. (or, if a tax treaty applies, is attributable to a permanent establishment or fixed place of business maintained by the non-U.S. holder in the U.S.); (2) in the case of certain capital gains recognized by a non-U.S. holder that is an individual, such individual is present in the U.S. for 183 days or more during the taxable year in which the capital gain is recognized and certain other conditions are met; (3) the non-U.S. holder is subject to backup withholding; or (4) Ensco Delaware is or has been a “U.S. real property holding corporation” within the meaning of Section 897(c)(2) of the Code at any time within the shorter of the five-year period preceding the merger or such non-U.S. holder’s holding period, and the non-U.S. holder holds, or has held at any time during such shorter period, more than 5 percent of the Ensco Delaware common stock. Ensco Delaware does not believe that it is or has been a U.S. real property holding corporation within the last five years.

 

If a non-U.S. holder is a citizen or resident of, or otherwise subject to taxation in, a country other than the U.S. or the U.K., the tax consequences of the exchange of Ensco Delaware shares for ADSs will depend on the applicable tax laws in such country.

 

Consequences of Owning and Disposing of ADSs

 

A non-U.S. holder generally should not be subject to U.S. federal income or withholding tax on dividends from Ensco UK unless: (1) the dividends are effectively connected with the non-U.S. holder’s conduct of a trade or business in the U.S. (or, if a tax treaty applies, the dividends are attributable to a permanent establishment or fixed place of business maintained by the non-U.S. holder in the U.S.); or (2) such non-U.S. holder is subject to backup withholding.

 

In addition, a non-U.S. holder generally will not be subject to U.S. federal income or withholding tax on any gain recognized on the sale, exchange or other disposition of ADSs unless: (1) such gain is effectively connected with the conduct by the non-U.S. holder of a trade or business within the U.S. (or, if a tax treaty applies, is attributable to a permanent establishment or fixed place of business maintained by the non-U.S. holder in the U.S.); (2) in the case of certain capital gains recognized by a non-U.S. holder that is an individual, such individual is present in the U.S. for 183 days or more during the taxable year in which the capital gain is recognized and certain other conditions are met; or (3) the non-U.S. holder is subject to backup withholding.

 

If a non-U.S. holder is a citizen or resident of, or otherwise subject to taxation in, a country other than the U.S. or the U.K., the tax consequences of owning and disposing of ADSs will depend on the applicable tax laws in such country.

 

Material Tax Consequences to U.S. Holders if Ensco UK is Ultimately Determined to Be a U.S. Corporation for U.S. Federal Income Tax Purposes

 

Notwithstanding the foregoing, it is possible that the IRS may assert and ultimately establish that Ensco UK should be treated as a U.S. corporation for U.S. federal income tax purposes under Section 7874 of the Code. If the IRS were to prevail, Section 1.7874-2T(m)(1) of the 2009 Regulations provides that Ensco UK should be deemed to convert to a U.S. corporation in a “reorganization” described in Section 368(a)(1)(F) of the Code on the day before the effective date of the merger. Consequently, the merger should qualify as a “reorganization” within the meaning of Section 368(a) of the Code, and the holders of Ensco Delaware shares should not be subject to U.S. federal income tax on the receipt of ADSs in exchange for their Ensco Delaware shares under Section 367(a) of the Code or otherwise. In such case, the adjusted tax basis of the ADSs received by a U.S. holder should be equal to such holder’s adjusted tax basis in its Ensco Delaware shares exchanged therefor. In addition, the holding period for any ADSs received by holders should include the holding period of the Ensco Delaware shares exchanged therefor. The consequences of owning and disposing of the ADSs should be the same as those of owning and disposing of Ensco Delaware shares.

If the IRS asserts and ultimately establishes that Ensco UK should be treated as a U.S. corporation for U.S. federal income tax purposes under Section 7874 of the Code, the resolution of the tax controversy may not be known until several years following the merger. Consequently, a U.S. holder that reported gain on its 2009 U.S. income tax return under Section 367(a) of Code as a result of the merger (as discussed above) may need to file an amended U.S. federal income tax return for the year in which the merger occurred in order to reflect that such U.S. holder should not have recognized gain under Section 367(a) of the Code. Furthermore, such U.S. holder may need to file an amended U.S. federal income tax return for any taxable year in which such U.S. holder disposed of any ADS received in the merger in order to reflect that the U.S. holder’s adjusted tax basis in such ADS should equal such holder’s adjusted tax basis in its Ensco Delaware shares exchanged therefor.

 

Importantly, it is possible that a tax controversy on the application of Section 7874 to the merger may not be resolved within the period of time a holder is eligible to file an amended return. As such, it is possible that certain holders may not have the opportunity to amend their 2009 U.S. income tax returns, or subsequent tax returns, as described herein. Thus, certain holders who recognize gain under Section 367(a) of the Code in 2009 could lose the opportunity to seek a refund of tax paid with respect to such gain if the IRS asserts and ultimately establishes that no gain should have been realized by such holder in 2009 because Ensco UK should be treated as a U.S. corporation for U.S. federal income tax purposes under Section 7874 of the Code. In addition, such holders may not be permitted to increase their adjusted tax basis in their ADSs, notwithstanding that such holders recognized gain under Section 367(a) of the Code.

 

Information Reporting and Backup Withholding

 

U.S. holders that own at least five percent (of total voting power or total value) of Ensco Delaware immediately before, and/or at least five percent (of total voting power or total value) of Ensco UK immediately after, the merger will be required to file with the IRS certain Section 368(a) reorganization and/or Section 351 statements. Other information reporting, including with respect to certain U.S. holders, information reporting on IRS Form 926, could also apply to the merger. Shareholders of Ensco Delaware should consult their own tax advisors about the information reporting requirements that could be applicable to the exchange of Ensco Delaware shares for ADSs in the merger and any potential penalties associated with a failure to satisfy such requirements.

 

Dividends on ADSs paid within the U.S. or through certain U.S.-related financial intermediaries are subject to information reporting and may be subject to backup withholding (currently at a 28 percent rate) unless the holder (1) is a corporation or other exempt recipient (including generally non-U.S. holders who establish such foreign status) or (2) provides a taxpayer identification number and satisfies certain certification requirements. Information reporting requirements and backup withholding may also apply to the payment of proceeds from a sale of ADSs within the U.S. Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against the holder’s U.S. federal income tax liability, provided that the holder furnishes certain required information to the IRS. Holders should consult their tax advisor regarding the application of information reporting and backup withholding to their particular situations.

 

If a U.S. holder of ADSs does not provide us (or our paying agent) the holder’s correct taxpayer identification number or other required information, the holder may be subject to penalties imposed by the IRS.

 

THE U.S. FEDERAL INCOME TAX CONSEQUENCES SUMMARIZED ABOVE ARE FOR GENERAL INFORMATION ONLY. EACH ENSCO DELAWARE SHAREHOLDER SHOULD CONSULT HIS OR HER TAX ADVISOR AS TO THE PARTICULAR CONSEQUENCES THAT MAY APPLY TO SUCH SHAREHOLDER.

 

Scope of Discussion

 

The following paragraphs are the opinion of our external counsel and are intended as a general guide to current U.K. tax law and HMRC practice applying as at the date of this document (both of which are subject to change at any time, possibly with retrospective effect) in respect of the taxation of capital gains, the taxation of dividends paid

by Ensco UK and stamp duty and stamp duty reserve tax on the transfer of Class A Ordinary Shares, uncertificated ADSs and ADSs evidenced by ADRs. They relate only to persons who are beneficial owners of the ADSs, or the “ADS Holders.” These paragraphs may not relate to certain classes of holders of the ADSs, such as employees or directors of Ensco UK or its affiliates, persons who are connected with Ensco UK, insurance companies, charities, collective investment schemes, pension schemes or persons who hold ADSs otherwise than as an investment, or individuals who are not domiciled in the U.K. These paragraphs do not describe all of the circumstances in which ADS Holders may benefit from an exemption or relief from taxation. It is recommended that all ADS Holders obtain their own taxation advice. In particular, non-U.K. resident or domiciled ADS Holders are advised to consider the potential impact of any relevant double tax agreements.

 

Taxation of Merger

 

Capital Gains Tax

 

At the effective time of the merger, an individual stockholder of Ensco Delaware who is resident or ordinarily resident in the U.K. will be treated as disposing of his or her stock in Ensco Delaware for a consideration equal to the market value of the stock at that time, which may, depending on the stockholder’s individual circumstances, give rise to a chargeable gain or an allowable loss for the purposes of capital gains tax. An individual stockholder who is neither resident nor ordinarily resident in the U.K. will not be chargeable to capital gains tax on capital gains arising on the disposal of his or her stock in Ensco Delaware, unless the stockholder carries on a trade, profession or vocation in the U.K. through a branch or agency in the U.K. and the stock was acquired, used in or for the purposes of the branch or agency or used in or for the purposes of the trade, profession or vocation carried on by the stockholder through the branch or agency. In these circumstances, the stockholder will be treated as disposing of their stock in Ensco Delaware for a consideration equal to the market value of the stock at that time, which may, depending on the stockholder’s individual circumstances, give rise to a chargeable gain or an allowable loss for the purposes of capital gains tax. The rate of capital gains tax on chargeable gains is 18 percent for the tax year 2009/2010.

 

The merger should not be treated as giving rise to a distribution which will be chargeable to income tax. The individual stockholder will be treated as acquiring the ADSs for a consideration equal to his or her market value at the time of the merger for capital gains tax purposes.

 

Corporation Tax

 

At the effective time of the merger, a corporate stockholder of Ensco Delaware who is resident in the U.K. will be treated as disposing of its stock in Ensco Delaware for a consideration equal to the market value of the stock at that time, which may, depending on the stockholder’s individual circumstances, give rise to a chargeable gain or an allowable loss for the purposes of corporation tax. A corporate stockholder which is not resident in the U.K. will not be liable for corporation tax on chargeable gains accruing on the disposal of its stock in Ensco Delaware unless it carries on a trade in the U.K. through a permanent establishment in the U.K. and the stock was acquired, used in or for the purposes of the permanent establishment or used in or for the purposes of the trade carried on by the stockholder through the permanent establishment. In these circumstances, the non-U.K. resident stockholder of the Ensco Delaware stock may, depending on its individual circumstances, be chargeable to corporation tax on chargeable gains arising from a disposal of its Ensco Delaware stock. The merger should not be treated as giving rise to a distribution which will be chargeable to corporation tax.

 

The full rate of corporation tax on chargeable gains in financial years 2009 and 2010 is 28 percent, although small companies may be entitled to claim the small companies rate of tax, in which case chargeable gains will be subject to corporation tax at rates of between 21 percent and 28 percent. A corporate stockholder of Ensco Delaware will be entitled to an indexation allowance in computing the amount of a chargeable gain accruing on the disposal of its Ensco Delaware stock, which will provide relief for the effects of inflation by references to movements in the U.K. retail price index. If the conditions of the substantial shareholding exemption set out in s.192A and Schedule 7AC of the Taxation of Chargeable Gains Act 1992 are satisfied in relation to a chargeable gain accruing to a corporate holder of Ensco Delaware stock, the chargeable gain will be exempt from corporation tax. The conditions of the substantial shareholding exemption which must be satisfied will depend on the individual

circumstances of the corporate stockholder. One of the conditions of the substantial shareholding exemption which must be satisfied is that the stockholder must have held a substantial shareholding in Ensco Delaware throughout a twelve-month period beginning not more than two years before the day on which the disposal takes place. Ordinarily, a corporate stockholder will not be regarded as holding a substantial shareholding in Ensco Delaware unless it (whether alone or together with other group companies) holds not less than 10 percent of Ensco Delaware’s ordinary share capital. The corporate stockholder will be treated as acquiring the ADSs for a consideration equal to their market value at the effective time of the merger for corporation tax purposes.

 

Taxation of Dividends

 

Withholding Tax

 

Dividends paid by Ensco UK will not be subject to any withholding or deduction for or on account of U.K. tax, irrespective of the residence or the individual circumstances of the ADS Holders.

 

Income Tax

 

An individual ADS Holder who is resident or ordinarily resident in the U.K. may, depending on his or her individual circumstances, be subject to income tax on dividends received from Ensco UK. An individual ADS Holder who is not resident or ordinarily resident in the U.K. will not be chargeable to income tax on dividends received from Ensco UK, unless the ADS Holder carries on (whether solely or in partnership) any trade, profession or vocation through a branch or agency in the U.K. and the ADSs are used by or held by or for that branch or agency. In these circumstances, the non-U.K. resident ADS Holder may, depending on his or her individual circumstances, be chargeable to income tax on dividends received from Ensco UK.

 

The rate of income tax which is chargeable on dividends received by higher rate taxpayers in the tax year 2009/2010 is 32.5 percent. Individual ADS Holders who are resident in the U.K. will be entitled to a tax credit equal to one-ninth of the amount of the dividend received from Ensco UK, which will be taken into account in computing the gross amount of the dividend which is chargeable to income tax. The tax credit will be credited against the ADS Holder’s liability (if any) to income tax on the gross amount of the dividend. An individual ADS Holder who is not subject to income tax on dividends received from Ensco UK will not be entitled to claim payment of the tax credit in respect of such dividends. The right of an individual ADS Holder who is not resident in the U.K. to a tax credit will depend on his or her individual circumstances. The U.K. Government announced in its Budget 2009 on April 22, 2009 that individuals whose total income chargeable to income tax exceeds £150,000 will be chargeable to income tax in respect of dividends in excess of that amount at the new rate of 42.5 percent in the tax year 2010/2011. An individual’s dividend income is treated as the top slice of their total income which is chargeable to income tax.

 

Corporation Tax

 

Unless an exemption is available as discussed below, a corporate ADS Holder that is resident in the U.K. will be subject to corporation tax on dividends received from Ensco UK. A corporate ADS Holder that is not resident in the U.K. will not be subject to corporation tax on dividends received from Ensco UK unless the ADS Holder carries on a trade in the U.K. through a permanent establishment in the U.K. and the dividends form part of the profits of a trade carried on through or from the permanent establishment or the ADSs are used by, for or held by or for, the permanent establishment. In these circumstances, the non-U.K. resident corporate ADS Holder may, depending on its individual circumstances and if the exemption discussed below is not available, be chargeable to corporation tax on dividends received from Ensco UK.

 

The full rate of corporation tax chargeable on dividends received from Ensco UK in financial years 2009 and 2010 is 28 percent, although smaller companies may be entitled to claim the small companies rate of tax. If dividends paid by Ensco UK fall within an exemption from corporation tax set out in Part 9A of the Corporation Tax Act 2009, the receipt of the dividend by a corporate ADS Holder will be exempt from corporation tax. Generally, the conditions for exemption from corporation tax on dividends paid by Ensco UK should be satisfied, although the conditions which must be satisfied in any particular case will depend on the individual circumstances of the corporate ADS Holders.

ADS Holders that are regarded as small companies should generally be exempt from corporation tax on dividends received from Ensco UK, unless the dividends are made as part of a tax advantage scheme. ADS Holders that are not regarded as small companies should generally be exempt from corporation tax on dividends received from Ensco UK on the basis that the Class A Ordinary Shares underlying the ADSs should be regarded as non-redeemable ordinary shares. Alternatively, ADS Holders that are not small companies should also generally be exempt from corporation tax on dividends received from Ensco UK if they hold ADSs which represent less than 10 percent of the issued share capital of Ensco UK, would be entitled to less than 10 percent of the profits available for distribution to holders of the issued share capital of Ensco UK and would be entitled on a winding up to less than 10 percent of the assets of Ensco UK available for distribution to holders of its issued share capital. In certain limited circumstances, the exemption from corporation tax will not apply to such ADS Holders if a dividend is made as part of a scheme which has a main purpose of falling within the exemption from corporation tax.

 

Taxation of Capital Gains

 

Capital Gains Tax

 

A disposal of ADSs by an individual ADS Holder who is resident or ordinarily resident in the U.K. may, depending on his or her individual circumstances, give rise to a chargeable gain or an allowable loss for the purposes of capital gains tax. An individual ADS Holder who temporarily ceases to be resident or ordinarily resident in the U.K. for a period of less than five years and who disposes of his or her ADSs during that period of temporary non-residence may be liable to capital gains tax on a chargeable gain accruing on the disposal on his or her return to the U.K. under certain anti-avoidance rules. An individual ADS Holder who is neither resident nor ordinarily resident in the U.K. will not be chargeable to capital gains tax on capital gains arising on the disposal of their ADSs unless the ADS Holder carries on a trade, profession or vocation in the U.K. through a branch or agency in the U.K. and the ADSs were acquired, used in or for the purposes of the branch or agency or used in or for the purposes of the trade, profession or vocation carried on by the ADS Holder through the branch or agency. In these circumstances, the non-U.K. resident ADS Holder may, depending on his or her individual circumstances, be chargeable to capital gains tax on chargeable gains arising from a disposal of their ADSs. The rate of capital gains tax on chargeable gains is 18 percent in the tax year 2009/2010.

 

Corporation Tax

 

A disposal of ADSs by a corporate ADS Holder which is resident in the U.K. may give rise to a chargeable gain or an allowable loss for the purposes of corporation tax. A corporate ADS Holder that is not resident in the U.K. will not be liable for corporation tax on chargeable gains accruing on the disposal of its ADSs unless it carries on a trade in the U.K. through a permanent establishment in the U.K. and the ADSs were acquired, used in or for the purposes of the permanent establishment or used in or for the purposes of the trade carried on by the ADS Holder through the permanent establishment. In these circumstances, the non-U.K. resident ADS Holder may, depending on its individual circumstances, be chargeable to corporation tax on chargeable gains arising from a disposal of its ADSs.

 

The full rate of corporation tax on chargeable gains in financial years 2009 and 2010 is 28 percent, although small companies may be entitled to claim the small companies rate of tax. Corporate ADS Holders will be entitled to an indexation allowance in computing the amount of a chargeable gain accruing on a disposal of the ADSs, which will provide relief for the effects of inflation by reference to movements in the U.K. retail price index. If the conditions of the substantial shareholding exemption set out in s.192A and Schedule 7AC of the Taxation of Chargeable Gains Act 1992 are satisfied in relation to a chargeable gain accruing to a corporate ADS Holder, the chargeable gain will be exempt from corporation tax. The conditions of the substantial shareholding exemption which must be satisfied will depend on the individual circumstances of the corporate ADS Holder. One of the conditions of the substantial shareholding exemption which must be satisfied is that the corporate ADS Holder must have held a substantial shareholding in Ensco UK throughout a twelve-month period beginning not more than two years before the day on which the disposal takes place. Ordinarily, a corporate ADS Holder will not be regarded as holding a substantial shareholding in Ensco UK unless it (whether alone, or together with other group companies) directly holds not less than 10 percent of Ensco UK’s ordinary share capital (not represented by ADRs).

Stamp Duty and Stamp Duty Reserve Tax

 

The discussion below relates to holders of Class A Ordinary Shares or ADSs wherever resident (but not to holders such as market makers, brokers, dealers and intermediaries, to whom special rules apply).

 

Transfer of Class A Ordinary Shares and Uncertificated ADSs

 

Provided that any instrument of transfer is not executed in the U.K. and remains at all times outside the U.K. and the transfer does not relate to any matter or thing done or to be done in the U.K., no stamp duty is payable on the acquisition or transfer of (i) Class A Ordinary Shares not represented by ADSs and (ii) uncertificated ADSs (i.e., not evidenced by ADRs) held in a direct registration system. ADSs held in book-entry form on the facilities of The Depository Trust Company are not considered to be in a direct registration system. However, an unconditional agreement for such transfer, or a conditional agreement which subsequently becomes unconditional, will be liable to stamp duty reserve tax, or “SDRT,” generally at the rate of 0.5 percent of the consideration for the transfer; but such liability will be cancelled if the agreement is completed by a duty stamped instrument of transfer within six years of the date of the agreement, or if the agreement was conditional, the date the agreement became unconditional. Where stamp duty is paid, any SDRT previously paid will be repaid on the making of an appropriate claim. Stamp duty and SDRT are normally paid by the purchaser.

 

Transfer of ADSs Evidenced by ADRs

 

No stamp duty need, in practice, be paid on the acquisition or transfer of ADSs evidenced by ADRs provided that any instrument of transfer or contract for sale is not executed in the U.K. and remains at all times outside the U.K. and the transfer does not relate to any matter or thing done or to be done in the U.K. An agreement for the transfer of ADSs evidenced by ADRs will not give rise to a SDRT liability.

 

THE U.K. TAX CONSEQUENCES SUMMARIZED ABOVE ARE FOR GENERAL INFORMATION ONLY. EACH ENSCO DELAWARE STOCKHOLDER SHOULD CONSULT HIS OR HER TAX ADVISOR AS TO THE PARTICULAR U.K. TAX CONSEQUENCES THAT MAY APPLY TO SUCH STOCKHOLDER.

 

The following paragraphs are intended to be a general summary of certain material U.K. tax consequences relating to the merger based on current English law relating to corporation tax, stamp duty and stamp duty reserve tax and on Ensco Delaware’s external counsel’s understanding of the current administrative policies and practices of HMRC published in writing prior to the date hereof. This summary, and all other statements, do not otherwise take into account or anticipate any changes in law or practice, whether legislative, governmental or judicial decision or action, which could possibly be made effective on a retroactive basis. This summary does not address all U.K. corporation tax, stamp duty or stamp duty reserve tax consequences that may be relevant to Ensco Delaware, Ensco UK or any of their subsidiaries, and is not intended to be, nor should it be construed to be, legal or tax advice to any person.

 

The Merger

 

We expect that none of Ensco Delaware, Ensco UK or any of their subsidiaries will incur UK corporation tax as a result of completion of the merger.

 

Subject to certain exemptions, a charge to stamp duty or SDRT generally arises under U.K. law on the issue, transfer or appropriation of shares of companies incorporated in the U.K. to the issuer of depositary receipts, its nominee or agent. Such stamp duty or SDRT is payable by the issuer of the depositary receipts. The rate of such stamp duty or SDRT is generally 1.5 percent of either (i) in the case of an issue of shares, the issue price of the shares concerned, (ii) in the case of a transfer of shares, the amount or value of the consideration for the transfer, or (iii) in the case of an appropriation of shares, the value of the shares concerned. However, in view of the judgment of the European Court of Justice in HSBC Holdings plc, Vidacos Nominees Ltd v HMRC Case C-569/07 given on October 1, 2009, such charge to stamp duty or SDRT may be prohibited by Council Directive 69/335/EEC of July 17, 1969 concerning indirect taxes on the raising of capital (as amended).

The U.K. Government is considering the judgment of the Court and has not announced what action (if any) it intends to take in relation to the stamp duty and SDRT treatment of the issue, transfer or appropriation of shares of companies incorporated in the U.K. to the issuer of depositary receipts. Accordingly, with respect to the issue of Class A Ordinary Shares to the depositary on September 29, 2009, SDRT at the rate of 1.5 percent on the issue price of the Class A Ordinary Shares has been paid by Ensco Delaware on behalf of the depositary on the basis that all rights to claim repayment of the SDRT are reserved. Any claim for payment of overpaid SDRT, based on the HSBC Holdings judgment or otherwise, must be submitted to HMRC within six years after the date on which the SDRT was paid.

 

After the Merger

 

General

 

Subject to any available exemptions or other forms of relief, a U.K. resident company, such as Ensco UK, is subject to corporation tax on its worldwide income profits and chargeable gains. The current rate of corporation tax (except for small companies and in respect of certain offshore oil and gas extraction activities) is 28 percent.

 

Dividend Exemption

 

A U.K. resident company, such as Ensco UK, is exempt from corporation tax in respect of certain broad classes of dividend or other distributions (except of a capital nature) received from companies, whether they are resident in the U.K. or overseas, including dividends or other distributions from controlled companies and in respect of non-redeemable ordinary shareholdings.

 

Substantial Shareholding Exemption

 

A U.K. resident company, such as Ensco UK, which is a shareholder of a trading group is also exempt from corporation tax in respect of capital gains arising from the actual or deemed disposal of qualifying shareholdings in qualifying companies, whether they are resident in the U.K. or elsewhere. For this purpose, a capital distribution is treated as deemed disposal of the shares of the distributing company.

 

Controlled Foreign Companies

 

Subject to certain exemptions and other forms of relief, a U.K. resident company, such as Ensco UK, is liable to corporation tax on the income profits (whether or not distributed) of any controlled company which is resident in a foreign jurisdiction and is subject to a lower level of taxation on those profits. A controlled company will be regarded as being subject to a lower level of taxation if the amount of foreign income tax on its profits is less than three-quarters of the corresponding corporation tax that would be payable in the U.K. if the company were resident in the U.K. Any such foreign income tax on the profits of the controlled company is generally creditable for U.K. corporation tax purposes.

 

HMRC has, subject to certain conditions and limitations based on our facts and circumstances, granted exemption from the CFC regime in respect of all material subsidiaries of Ensco UK under the “motive test” exclusion for a period after the merger ending December 31, 2012, which period may be reduced or altered by subsequent legislation. The present U.K. Government is consulting on a potentially major reform of the CFC regime and has stated its intention to legislate in 2011. However, the U.K. Government has not yet put forward any reform proposals and there can be no certainty about the nature and extent of any future changes to the current CFC regime.

 

The following information is a summary of the material terms of the Class A Ordinary Shares, nominal value $0.10 per share, as specified in the form of Ensco UK’s articles of association and which are proposed to be adopted immediately prior to the consummation of the merger, which we refer to as the “New Articles.” You are encouraged to read the New Articles, which are included as Annex B to this proxy statement/prospectus. See also “Description of American Depositary Shares of Ensco UK” and “Comparison of Rights of Stockholders/Shareholders.”

 

Pursuant to the merger agreement, each issued and outstanding share of common stock of Ensco Delaware will be converted into the right to receive one ADS. Each ADS represents one Class A Ordinary Share. The deposit agreement among Ensco UK, Citibank and you governs the rights of holders of the ADSs as described in “Description of American Depositary Shares of Ensco UK.”

 

All of the issued Class A Ordinary Shares are fully paid and not subject to any further calls or assessments by Ensco UK. There are no conversion rights, redemption provisions or sinking fund provisions relating to any Class A Ordinary Shares.

 

All Class A Ordinary Shares, including those underlying the ADSs to be delivered in the merger, are to be represented by certificates in registered form issued (subject to the terms of issue of the shares) by Ensco UK’s registrar.

 

Under English law, persons who are neither residents nor nationals of the U.K. may freely hold, vote and transfer the Ensco UK shares in the same manner and under the same terms as U.K. residents or nationals.

 

As of the date of this proxy statement/prospectus and on the date of adoption of the New Articles there are, and will be:

 

 

 

As of the date of this proxy statement/prospectus and immediately prior to the consummation of the merger, the Ensco UK Board is or will be authorized to allot a total of an additional number of shares as follows:

 

 

 

The Class A Ordinary Shares and the Class B Ordinary Shares, or together the “Ordinary Shares,” will have the same rights and privileges in all respects. The outstanding Class B Ordinary Shares will remain outstanding after the merger, but will have no voting rights or rights to dividends or distributions to the extent that they are held by Ensco Delaware. If issued, the rights of holders of Unclassified Shares will be determined by the Ensco UK Board in accordance with Ensco UK’s articles of association.

 

Subject to the Companies Act, the Ensco UK Board may declare a dividend to be paid to the shareholders according to their respective rights and interests in Ensco UK, and may fix the time for payment of such dividend. The Ensco UK Board may from time to time declare and pay (on any class of shares of any amounts) such dividends as appear to them to be justified by the profits of Ensco UK that are available for distribution. There are no fixed dates on which entitlement to dividends arise on any of the Ordinary Shares. The Ensco UK Board may direct the

payment of all or any part of a dividend to be satisfied by distributing specific assets, in particular paid up shares or debentures of any other company. The New Articles also permit a scrip dividend scheme under which shareholders may be given the opportunity to elect to receive fully paid Ordinary Shares instead of cash, with respect to all or part of future dividends. Shares held by or for the benefit of an Ensco UK subsidiary will have no voting rights and will not be entitled to any dividends or distributions, including any scrip dividends, bonus shares or dividends or distributions of property or debentures of any other company.

 

To the extent that as a result of the merger any Class A Ordinary Shares held by the custodian are represented by ADSs held by or for the benefit of any of Ensco UK’s subsidiaries, such as Ensco Delaware, then the New Articles provide that such Class A Ordinary Shares will not be entitled to receive dividends or distributions, including any scrip dividends, bonus shares or dividends or distributions of property or debentures of any other company, and therefore the holder of such ADSs shall not be entitled to any such dividends or distributions while such ADSs representing those Class A Ordinary Shares are held by or for the benefit of such subsidiaries.

 

If a shareholder owes any money to Ensco UK relating in any way to any class of Ensco UK shares, the Ensco UK Board may deduct any of this money from any dividend on any shares held by the shareholder, or from other money payable by Ensco UK in respect of the shares. Money deducted in this way may be used to pay the amount owed to Ensco UK.

 

Unclaimed dividends and other amounts payable by Ensco UK in respect of an Ordinary Share can be invested or otherwise used by directors for the benefit of Ensco UK until they are claimed under English law. A dividend or other money remaining unclaimed for a period of twelve years after it first became due for payment will be forfeited and cease to remain owed by Ensco UK.

 

At a general meeting any resolutions put to a vote must be decided on a poll.

 

Subject to any rights or restrictions as to voting attached to any class of shares in accordance with the articles of association of Ensco UK and subject to disenfranchisement (i) in the event of non-payment of any call or other sum due and payable in respect of any shares not fully paid, (ii) in the event of any non-compliance with any statutory notice requiring disclosure of an interest in shares or (iii) with respect to any shares held by any subsidiary of Ensco UK, every shareholder (other than Ensco Delaware or any other subsidiary of Ensco UK) who (being an individual) is present in person or (being a corporation) is present by a duly authorized corporate representative at a general meeting of Ensco UK will have one vote for every share of which he or she is the holder, and every person present who has been appointed as a proxy shall have one vote for every share in respect of which he or she is the proxy, except that any proxy who has been appointed by the depositary shall have such number of votes as equals the number of shares in relation to which such proxy has been appointed.

 

In the case of joint holders, the vote of the person whose name stands first in the register of shareholders and who tenders a vote, whether in person or by proxy, is accepted to the exclusion of any votes tendered by any other joint holders.

 

The necessary quorum for a general shareholder meeting is the shareholders who together represent at least the majority of the voting rights of all the shareholders entitled to vote present in person or by proxy (i.e., any shares whose voting rights have been disenfranchised (whether pursuant to the Companies Act and/or under the New Articles) shall be disregarded for the purposes of determining a quorum).

 

An annual general meeting shall be called by not less than 21 clear days’ notice and no more than 60 days’ notice. For all other general meetings except general meetings properly requisitioned by shareholders, such meetings shall be called by not less than 14 clear days’ notice and no more than 60 days’ notice. The notice of meeting must also specify a time (which shall not be more than 60 days nor less than 10 days before the date of the meeting) by which a person must be entered on the register in order to have the right to attend or vote at the meeting. The number of shares then registered in their respective names shall determine the number of votes a person is entitled to cast at that meeting.

An appointment of proxy (whether in hard copy form or electronic form) must be received by Ensco UK before the time for holding the meeting or adjourned meeting at which the person named in the appointment of proxy proposes to vote; in the case of a poll taken more than 48 hours after the meeting at which the relevant vote was to be taken, an appointment of proxy must be received after such meeting and not less than 24 hours (or such shorter time as the Ensco UK Board may determine) before the time appointed for taking the poll; or in the case of a poll not taken immediately but taken not more than 48 hours after the meeting, the appointment of proxy must be delivered at the meeting at which the poll is to be taken. An appointment of proxy not received or delivered in accordance with the New Articles is invalid under English law.

 

To the extent that as a result of the merger any Class A Ordinary Shares held by the custodian are represented by ADSs held by or for the benefit of any of Ensco UK’s subsidiaries, including Ensco Delaware, then under the Companies Act such Class A Ordinary Shares will not have voting rights.

 

In the event of a voluntary winding-up of Ensco UK, the liquidator may, on obtaining any sanction required by law, divide among the shareholders the whole or any part of the assets of Ensco UK, whether or not the assets consist of property of one kind or of different kinds.

 

The liquidator may also, with the same authority, transfer the whole or any part of the assets to trustees upon any trusts for the benefit of the shareholders as the liquidator decides. No past or present shareholder can be compelled to accept any asset which could subject him or her to a liability.

 

Under Section 549 of the Companies Act, directors are, with certain exceptions, unable to allot securities without being authorized either by the shareholders in a general meeting or by Ensco UK’s articles of association pursuant to Section 551 of the Companies Act. In addition, under the Companies Act, the issuance of equity securities that are to be paid for wholly in cash (except shares held under an employees’ share scheme) must be offered first to the existing equity shareholders in proportion to the respective nominal (i.e., par) values of their holdings on the same or more favorable terms, unless a special resolution (i.e., 75 percent of votes cast) to the contrary has been passed in a general meeting of shareholders or the articles of association otherwise provide an exclusion from this requirement (which exclusion can be for a maximum of five years after which shareholders approval would be required to renew the exclusion). In this context, equity securities generally means in relation to Ensco UK, Ordinary Shares (being shares other than shares which with respect to dividends or capital, carry a right to participate only up to a specified amount in a distribution) and all rights to subscribe for or convert securities into such shares.

 

A shareholder resolution proposed to be passed immediately prior to the consummation of the merger will authorize the directors (generally and unconditionally), for a period up to five years from the date on which the resolution is passed to allot equity securities, or to grant rights to subscribe for or to convert or exchange any security into shares of the Company, up to an aggregate nominal amount of $10,000,000 Class A Ordinary Shares and $20,000,000 Unclassified Shares and exclude preemptive rights in respect of such issuances for the same period of time. Such authority will continue for five years and thereafter it must be renewed, but we may seek renewal for additional five year terms more frequently. Ensco UK may, before the expiration of any such authority, make an offer or agreement which would or might require Ensco UK shares to be allotted (or rights to be granted) after such expiration, and the directors may allot shares or grant rights in pursuance of such an offer or agreement as if the authority to allot had not expired.

 

Subject to the provisions of the Companies Act and to any rights attached to any existing shares, any Ensco UK shares may be issued with, or have attached to them, such rights or restrictions as the shareholders of Ensco UK may by ordinary resolution determine, or, where the above authorizations are in place, the Ensco UK Board may determine such rights or restrictions.

 

The Companies Act prohibits an English company from issuing shares for no consideration, including with respect to grants of restricted stock made pursuant to equity incentive plans. Accordingly, the nominal value of the

shares issued upon the lapse of restrictions or the vesting of any restricted stock award or any other share-based grant underlying any ADS must be paid pursuant to the Companies Act.

 

Section 793 of the Companies Act gives Ensco UK the power to require persons whom it knows has, or whom it has reasonable cause to believe has, or within the previous three years has had, any ownership interest in any shares (which we refer to as the “default shares”) to disclose prescribed particulars of those shares. For this purpose “default shares” includes any shares allotted or issued after the date of the Section 793 notice in respect of those shares. Failure to provide the information requested within the prescribed period after the date of sending the notice will result in sanctions being imposed against the holder of the “default shares” as provided within the Companies Act.

 

Under Ensco UK’s articles of association, Ensco UK will also withdraw voting and certain other rights, place restrictions on the rights to receive dividends and transfer “default shares” if the relevant holder of “default shares” has failed to provide the information requested within 14 days after the date of sending the notice, depending on the level of the relevant shareholding (and unless the Ensco UK Board decides otherwise).

 

Ensco UK may from time to time by ordinary resolution of its shareholders:

 

 

Subject to the Companies Act and to any rights the holders of any Ensco UK shares may have, Ensco UK may purchase any of its own shares of any class (including any redeemable shares, if the Ensco UK Board should decide to issue any) by way of “off market purchases” with the prior approval of 75 percent of shareholders by special resolution. Such approval lasts for up to five years from the date of the special resolution, and renewal of such approval for additional five year terms may be sought more frequently. A special resolution, which would authorize the repurchase of up to 30 percent per annum of the share capital outstanding as of the beginning of each fiscal year, is anticipated to be adopted prior to the effective time of the merger. However, shares may only be repurchased out of distributable profits or the proceeds of a fresh issue of shares made for that purpose, and, if a premium is paid, it must be paid out of distributable profits.

 

Ensco UK’s New Articles allow shareholders to transfer all or any of their shares by instrument of transfer in writing in any usual form or in any other form which is permitted by the Companies Act and is approved by the Ensco UK Board. The instrument of transfer must be executed by or on behalf of the transferor and (in the case of a transfer of a share which is not fully paid) by or on behalf of the transferee and must be delivered to the registered office or any other place the directors decide.

 

The Ensco UK Board may refuse to register a transfer:

 

(1) if the shares in question are not fully paid;

 

(2) if it is with respect to more than one class of shares;

 

(3) if it is with respect to shares on which Ensco UK has a lien;

 

(4) if it is in favor of more than four persons jointly;

 

(5) if it is not duly stamped (if such a stamp is required);

 

If the Ensco UK Board refuses to register a transfer of a share, it shall, within two months after the date on which the transfer was lodged with Ensco UK, send to the transferee notice of the refusal, together with its reasons for refusal.

 

The notice of a general meeting shall be given to the shareholders (other than any who, under the provisions of the New Articles or the terms of allotment or issue of shares, are not entitled to receive notice), to the Ensco UK Board and to the auditors. Holders of ADSs are entitled to receive notices under the terms of the deposit agreement relating to ADSs. See “Description of American Depositary Shares of Ensco UK — Voting Rights.”

 

Under English law, Ensco UK is required to hold an annual general meeting of shareholders within 6 months from the day following the end of its fiscal year and, subject to the foregoing, the meeting may be held at a time and place determined by the Ensco UK Board.

 

The New Articles provide that English courts have exclusive jurisdiction with respect to any suits brought by shareholders against Ensco UK or its directors. See “Comparison of Rights of Stockholders/Shareholders — Liability of Directors and Officers” for a discussion of the inability of an English company to exempt directors and officers from certain liabilities.

 

The level of anti-takeover provisions with respect to Ensco UK differs from that with respect to Ensco Delaware by virtue of the differences between the DGCL and the Companies Act, the differences between the certificate of incorporation and bylaws of Ensco Delaware and the New Articles of Ensco UK and the differences between the rights of holders of Ensco Delaware common stock and the terms and conditions related to the ADSs as described in the deposit agreement. The provisions summarized below do not include those provisions required by the Companies Act. The provisions of the New Articles summarized below may have the effect of discouraging, delaying or preventing hostile takeovers, including those that might result in a premium being paid over the market price of Class A Ordinary Shares or ADSs, as applicable, and discouraging, delaying or preventing changes in control or management of Ensco UK.

 

Takeover offers and certain other transactions in respect of certain public companies are regulated by the U.K. City Code on Takeovers and Mergers, or “Takeover Code,” which is administered by the Takeover Panel, a body consisting of representatives of the City of London financial and professional institutions which oversees the conduct of takeovers. An English public limited company is potentially subject to the Takeover Code if, among other factors, its central place of management and control are within the U.K., the Channel Islands or the Isle of Man. The Takeover Panel will generally look to the residency of a company’s directors to determine where it is centrally managed and controlled. The Takeover Panel has confirmed that, based upon Ensco UK’s current and intended plans for its directors and management, for purposes of the Takeover Code, Ensco UK will be considered to have its place of central management and control outside the U.K., the Channel Islands or the Isle of Man and, therefore, that the Takeover Code will not apply to Ensco UK. It is possible that in the future circumstances could change that may cause the Takeover Code to apply to Ensco UK.

 

Classified Board of Directors

 

The Ensco UK Board, like our Board, will be divided into three classes, with the members of each class serving for staggered three-year terms. As a result, only one class of directors will be elected at each annual general meeting of shareholders, with the other classes continuing for the remainder of their respective three-year terms. Under English law, shareholders have no cumulative voting rights. In addition, Ensco UK’s articles of association incorporate similar provisions to those contained in Ensco Delaware’s bylaws and certificate of incorporation,

which regulate shareholders’ ability to nominate directors for election subject to a 5 percent share ownership requirement. Although shareholders have the ability to remove a director without cause under English law, the classification of the directors, the lack of cumulative voting and the limitations on shareholders’ powers to nominate directors will have the effect of making it more difficult not only for any party to obtain control of Ensco UK by replacing the majority of the Ensco UK Board but also to force an immediate change in the composition of the Ensco UK Board. However, under the New Articles, if the shareholders remove the entire board, a shareholder may then convene a general meeting for the purpose of appointing directors. It should be noted that holders of ADSs may have to surrender their ADSs and withdraw their Class A Ordinary Shares in order to exercise their rights to nominate and remove directors.

 

Issuance of Unclassified Shares

 

The Ensco UK Board will have the authority, without further action of its shareholders for a period of five years, but subject to its statutory and fiduciary duties, to issue up to 20,000,000 Unclassified Shares, par value $1.00 per share, in one or more series and to fix the powers, preferences, rights and qualifications, limitations or restrictions thereof. Such authority will continue for five years and thereafter it must be renewed, but we may seek renewal for additional five year terms more frequently. The issuance of Unclassified Shares on various terms could adversely affect the holders of Class A Ordinary Shares or ADSs. The potential issuance of Unclassified Shares may discourage bids for Class A Ordinary Shares or ADSs at a premium over the market price, may adversely affect the market price of ADSs and may discourage, delay or prevent a change of control of Ensco UK.

 

Shareholder Rights Plan

 

The Ensco UK Board will have the necessary corporate authority, without further action of its shareholders for a period of five years, but subject to its statutory and fiduciary duties, to give effect to a shareholder rights plan and to fix the terms thereof. Such a plan could make it more difficult for another party to obtain control of Ensco UK by threatening to dilute a potential acquirer’s ownership interest in the company under certain circumstances. The Ensco UK Board may adopt a shareholder rights plan at any time, including in conjunction with the consummation of the merger or sometime thereafter. Ensco Delaware currently has the authority to adopt a shareholder rights plan under Delaware law. See “Comparison of Rights of Stockholders/Shareholders — Anti-takeover Matters.”

 

The anti-takeover and other provisions of the New Articles, as well as the adoption of a shareholder rights plan, could discourage potential acquisition proposals and could delay or prevent a change in control. These provisions are intended to enhance shareholder value by discouraging certain types of abusive takeover tactics. However, these provisions could have the effect of discouraging others from making tender offers for Class A Ordinary Shares or ADSs and, as a consequence, also may inhibit fluctuations in the market price of ADSs that could result from actual or rumored takeover attempts.

 

Citibank has agreed to act as the depositary for the ADSs evidencing the Class A Ordinary Shares. Citibank’s depositary offices are located at 388 Greenwich Street, New York, New York 10013. ADSs represent ownership interests in securities that are on deposit with the depositary. ADSs are normally evidenced by ADRs. The depositary typically appoints a custodian to safekeep the securities on deposit. In this case, the custodian is Citibank, N.A. (London Branch), located at 25 Molesworth Street Lewisham, London SE137EX.

 

We have appointed Citibank as depositary pursuant to a deposit agreement. A copy of the deposit agreement is on file with the SEC under cover of a Registration Statement on Form F-6. You may obtain a copy of the deposit agreement from the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549 and from the SEC’s website (www.sec.gov).

 

We are providing a summary description of the material terms of the ADSs and of your material rights as an owner of ADSs. Please remember that summaries by their nature lack the precision of the information summarized and that the rights and obligations of an owner of ADSs will be determined by reference to the terms of the deposit agreement and not by this summary. We urge you to review the deposit agreement in its entirety.

 

Each ADS represents the right to receive one Class A Ordinary Share of Ensco UK on deposit with the custodian. An ADS also represents the right to receive any other property received by the depositary or the custodian on behalf of the owner of the ADS but that has not been distributed to the owners of ADSs because of legal restrictions or practical considerations.

 

If you become an owner of ADSs, you will become a party to the deposit agreement and therefore will be bound by its terms and by the terms of any ADR that evidences your ADSs. The deposit agreement and the ADR specify our rights and obligations as well as your rights and obligations as owner of ADSs and those of the depositary. As an ADS holder you appoint the depositary to act on your behalf in certain circumstances. The deposit agreement and the ADRs are governed by New York law. However, our obligations to the holders of Class A Ordinary Shares will continue to be governed by English law.

 

As an owner of ADSs, you may hold your ADSs either by means of one or more ADRs registered in your name, through a brokerage or safekeeping account, or through an account established by the depositary in your name reflecting the registration of uncertificated ADSs directly on the books of the depositary (commonly referred to as the “direct registration system” or “DRS”). The direct registration system reflects the uncertificated (book-entry) registration of ownership of ADSs by the depositary. Under the direct registration system, ownership of ADSs is evidenced by periodic statements issued by the depositary to the holders of the ADSs. The direct registration system includes automated transfers between the depositary and The Depository Trust Company, or “DTC,” the central book-entry clearing and settlement system for equity securities in the U.S.

 

If you decide to hold your ADSs through your brokerage or safekeeping account, you must rely on the procedures of your broker or bank to assert your rights as ADS owner. Banks and brokers typically hold securities such as the ADSs through clearing and settlement systems such as DTC. The procedures of such clearing and settlement systems may limit your ability to exercise your rights as an owner of ADSs. Please consult with your broker or bank if you have any questions concerning these limitations and procedures. All ADSs held through DTC will be registered in the name of a nominee of DTC. This summary description assumes you have opted to own the ADSs directly by means of an ADS registered in your name and, as such, we will refer to you as the “holder.” When we refer to “you,” we assume the reader owns ADSs and will own ADSs at the relevant time.

 

As a holder, you generally have the right to receive the distributions we make on the securities deposited with the custodian. Your receipt of these distributions may be limited, however, by practical considerations and legal limitations. Holders will receive such distributions under the terms of the deposit agreement in proportion to the number of ADSs held as of a specified record date.

Distributions of Cash

 

Whenever we make a cash distribution for the securities on deposit with the custodian, we will deposit the funds with the custodian. Upon receipt of confirmation of the deposit of the requisite funds, the depositary will arrange for the funds to be converted into U.S. dollars, if necessary, and for the distribution of the U.S. dollars to the holders, subject to English law.

 

The conversion into U.S. dollars will take place only if practicable and if the U.S. dollars are transferable to the U.S., which we expect them to be. The amounts distributed to holders will be net of the fees, expenses, taxes and governmental charges payable by holders under the terms of the deposit agreement. The depositary will apply the same method for distributing the proceeds of the sale of any property (such as undistributed rights) held by the custodian in respect of securities on deposit.

 

Distributions of Class A Ordinary Shares

 

If we elect to make a free distribution of Class A Ordinary Shares for the securities on deposit with the custodian, we will deposit the applicable number of Class A Ordinary Shares with the custodian. Upon receipt of confirmation of such deposit, the depositary will either distribute to holders new ADSs representing the Class A Ordinary Shares deposited or modify the ADS-to-Class A Ordinary Shares ratio, in which case each ADS you hold will represent rights and interests in the additional Class A Ordinary Shares so deposited. Only whole new ADSs will be distributed. Fractional entitlements will be sold and the proceeds of such sale will be distributed as in the case of a cash distribution.

 

The distribution of new ADSs or the modification of the ADS-to-Class A Ordinary Shares ratio upon a distribution of Class A Ordinary Shares will be made net of the fees, expenses, taxes and governmental charges payable by holders under the terms of the deposit agreement. In order to pay such taxes or governmental charges, the depositary may sell all or a portion of the new Class A Ordinary Shares so distributed.

 

No such distribution of new ADSs will be made if it would violate a law (i.e., the U.S. securities laws) or if it is not operationally practicable. If the depositary does not distribute new ADSs as described above, it may sell the Class A Ordinary Shares received upon the terms described in the deposit agreement and will distribute the proceeds of the sale as in the case of a distribution of cash.

 

Distributions of Rights

 

Whenever we intend to distribute rights to purchase additional Class A Ordinary Shares, we will give prior notice to the depositary and we will assist the depositary in determining whether it is lawful and reasonably practicable to distribute rights to purchase additional ADSs to holders.

 

The depositary will establish procedures to distribute rights to purchase additional ADSs to holders and to enable such holders to exercise such rights if it is lawful and reasonably practicable to make the rights available to holders of ADSs, and if we provide all of the documentation contemplated in the deposit agreement (such as opinions to address the lawfulness of the transaction). You may have to pay fees, expenses, taxes and other governmental charges to subscribe for the new ADSs upon the exercise of your rights. The depositary is not obligated to establish procedures to facilitate the distribution and exercise by holders of rights to purchase new Class A Ordinary Shares other than in the form of ADSs.

 

The depositary will not distribute the rights to you if:

 

 

The depositary will sell the rights that are not exercised or not distributed if such sale is lawful and reasonably practicable. The proceeds of such sale will be distributed to holders as in the case of a cash distribution. If the depositary is unable to sell the rights, it will allow the rights to lapse.

Elective Distributions

 

Whenever we intend to distribute a dividend payable at the election of shareholders either in cash or in additional shares, we will give prior notice thereof to the depositary and will indicate whether we wish the elective distribution to be made available to you. In such case, we will assist the depositary in determining whether such distribution is lawful and reasonably practicable.

 

The depositary will make the election available to you only if it is reasonably practicable and if we have provided all of the documentation contemplated in the deposit agreement. In such case, the depositary will establish procedures to enable you to elect to receive either cash or additional ADSs, in each case as described in the deposit agreement.

 

If the election is not made available to you, you will receive either cash or additional ADSs, depending on what a shareholder under English law would receive upon failing to make an election, as more fully described in the deposit agreement.

 

Other Distributions

 

Whenever we intend to distribute property other than cash, Class A Ordinary Shares or rights to purchase additional Class A Ordinary Shares, we will notify the depositary in advance and will indicate whether we wish such distribution to be made to you. If so, we will assist the depositary in determining whether such distribution to holders is lawful and reasonably practicable.

 

If it is reasonably practicable to distribute such property to you and if we provide all of the documentation contemplated in the deposit agreement, the depositary will distribute the property to the holders in a manner it deems practicable.

 

The distribution will be made net of fees, expenses, taxes and governmental charges payable by holders under the terms of the deposit agreement. In order to pay such taxes and governmental charges, the depositary may sell all or a portion of the property received.

 

The depositary will not distribute the property to you and will sell the property if:

 

 

Whenever we decide to redeem any of the securities on deposit with the custodian, we will notify the depositary in advance. If it is practicable and if we provide all of the documentation contemplated in the deposit agreement, the depositary will provide notice of the redemption to the holders.

 

The custodian will be instructed to surrender the Class A Ordinary Shares being redeemed against payment of the applicable redemption price. The depositary will convert the redemption funds received into U.S. dollars, if necessary, upon the terms of the deposit agreement and will establish procedures to enable holders to receive the net proceeds from the redemption upon surrender of their ADSs to the depositary. You may have to pay fees, expenses, taxes and other governmental charges upon the redemption of your ADSs. If less than all ADSs are being redeemed, the ADSs to be retired will be selected by lot or on a pro rata basis, as the depositary may determine.

 

The Class A Ordinary Shares held on deposit for your ADSs may change from time to time. For example, there may be a change in nominal or par value, a split-up, cancellation, consolidation or reclassification of such Class A Ordinary Shares or a recapitalization, reorganization, merger, consolidation or sale of assets.

If any such change were to occur, your ADSs would, to the extent permitted by law, represent the right to receive the property received or exchanged in respect of the Class A Ordinary Shares held on deposit. The depositary may in such circumstances deliver new ADSs to you, amend the deposit agreement, the ADRs and the applicable Registration Statement(s) on Form F-6, call for the exchange of your existing ADSs for new ADSs and take any other actions that are appropriate to reflect as to the ADSs the change affecting the Class A Ordinary Shares. If the depositary may not lawfully distribute such property to you, the depositary may sell such property and distribute the net proceeds to you as in the case of a cash distribution.

 

The depositary may create ADSs on your behalf if you or your broker deposit Class A Ordinary Shares with the custodian. The depositary will deliver these ADSs to the person you indicate only after you pay any applicable issuance fees and any charges and taxes payable for the transfer of the Class A Ordinary Shares to the custodian. Your ability to deposit Class A Ordinary Shares and receive ADSs may be limited by U.S. and English law considerations applicable at the time of deposit.

 

The issuance of ADSs may be delayed until the depositary or the custodian receives confirmation that all required approvals have been given and that the Class A Ordinary Shares have been duly transferred to the custodian. The depositary will only issue ADSs in whole numbers.

 

When you make a deposit of Class A Ordinary Shares, you will be responsible for transferring good and valid title to the depositary. As such, you will be deemed to represent and warrant that:

 

 

If any of the representations or warranties are incorrect in any way, we and the depositary may, at your cost and expense, take any and all actions necessary to correct the consequences of the misrepresentations.

 

As an ADR Holder, you will be entitled to transfer, combine or split up your ADRs and the ADSs evidenced thereby. For transfers of ADRs, you will have to surrender the ADRs to be transferred to the depositary and also must:

 

 

To have your ADRs either combined or split up, you must surrender the ADRs in question to the depositary with your request to have them combined or split up, and you must pay all applicable fees, charges and expenses payable by ADR Holders, pursuant to the terms of the deposit agreement, upon a combination or split up of ADRs.

 

As a holder, you will be entitled to present your ADSs to the depositary for cancellation and then receive the corresponding number of underlying Class A Ordinary Shares at the custodian’s offices. Your ability to withdraw the Class A Ordinary Shares may be limited by U.S. and English legal considerations applicable at the time of withdrawal. You assume the risk for delivery of all funds and securities upon withdrawal. Once canceled, the ADSs will not have any rights under the deposit agreement.

 

If you hold ADSs registered in your name, the depositary may ask you to provide proof of identity and genuineness of any signature and such other documents as the depositary may deem appropriate before it will cancel your ADSs. The withdrawal of the Class A Ordinary Shares represented by your ADSs may be delayed until the depositary receives satisfactory evidence of compliance with all applicable laws and regulations. Please keep in mind that the depositary will only accept ADSs for cancellation that represent a whole number of securities on deposit.

 

You will have the right to withdraw the securities represented by your ADSs at any time except for:

 

 

The deposit agreement may not be modified to impair your right to withdraw the securities represented by your ADSs except to comply with mandatory provisions of law.

 

As a holder of ADSs (or ADRs evidencing ADSs), you generally have the right under the deposit agreement to instruct the depositary to exercise the voting rights for the Class A Ordinary Shares represented by your ADSs. The voting rights of holders of Class A Ordinary Shares are described in “Description of Class A Ordinary Shares of Ensco UK — Voting Rights.”

 

At our request, the depositary will distribute to you any notice of shareholders’ meeting received from us together with information explaining how to instruct the depositary to exercise the voting rights of the Class A Ordinary Shares of Ensco UK represented by ADSs.

 

If the depositary timely receives voting instructions from a holder of ADSs, it will endeavor to vote Class A Ordinary Shares represented by the holder’s ADSs in accordance with such voting instructions.

 

Please note that the ability of the depositary to carry out voting instructions may be limited by practical and legal limitations and the terms of the Class A Ordinary Shares on deposit. We cannot assure you that you will receive voting materials in time to enable you to return voting instructions to the depositary in a timely manner. Class A Ordinary Shares for which no voting instructions have been received will not be voted.

 

The Company has agreed to pay certain fees to the Depositary and to reimburse the Depositary for certain expenses.

 

As an ADS holder you will be responsible to pay certain fees and expenses incurred by the depositary and certain taxes and governmental charges such as:

 

 

 

The Company shall pay to the Depositary such fees and charges and reimburse the Depositary for such out-of-pocket expenses as the Depositary and the Company may agree from time to time.

 

We may agree with the depositary to modify the deposit agreement at any time without your consent. We undertake to give holders 30 days’ prior notice of any modifications that would materially prejudice any of their substantial rights under the deposit agreement. We will not consider to be materially prejudicial to your substantial rights any modifications or supplements that are reasonably necessary for the ADSs to be registered under the Securities Act or to be eligible for book-entry settlement, in each case without imposing or increasing the fees and charges you are required to pay. In addition, we may not be able to provide you with prior notice of any modifications or supplements that are required to accommodate compliance with applicable provisions of law.

 

You will be bound by the modifications to the deposit agreement if you continue to hold your ADSs after the modifications to the deposit agreement become effective. The deposit agreement cannot be amended to prevent you from withdrawing the Class A Ordinary Shares represented by your ADSs (except as permitted by law).

 

We have the right to direct the depositary to terminate the deposit agreement. Similarly, the depositary may in certain circumstances on its own initiative terminate the deposit agreement. In either case, the depositary must give notice to the holders at least 30 days before termination. Until termination, your rights under the deposit agreement will be unaffected during such notice period.

 

After termination, the depositary will continue to collect distributions received (but will not distribute any such property until you request the cancellation of your ADSs) and may sell the securities held on deposit. After the sale, the depositary will hold the proceeds from such sale and any other funds then held for the holders of ADSs in a non-interest bearing account. At that point, the depositary will have no further obligations to holders other than to account for the funds then held for the holders of ADSs still outstanding (after deduction of applicable fees, taxes and expenses).

 

The depositary will maintain ADS holder records at its depositary office. You may inspect such records at such office during regular business hours but solely for the purpose of communicating with other holders in the interest of business matters relating to the ADSs and the deposit agreement.

 

The depositary will maintain in New York facilities to record and process the issuance, cancellation, combination, split-up and transfer of ADSs. These facilities may be closed from time to time, to the extent not prohibited by law.

 

The deposit agreement limits our obligations and the depositary’s obligations to you. Please note the following:

 

 

 

The depositary may, in certain circumstances, issue ADSs before receiving a deposit of Class A Ordinary Shares or release Class A Ordinary Shares before receiving ADSs for cancellation. These transactions are commonly referred to as “pre-release transactions.” The deposit agreement limits the aggregate size of pre-release transactions and imposes a number of conditions on such transactions (i.e., the need to receive collateral, the type of collateral required, the representations required from brokers, etc.). The depositary may retain the compensation received from the pre-release transactions.

 

You will be responsible for the taxes and other governmental charges payable on the ADSs and the securities represented by the ADSs. We, the depositary and the custodian may deduct from any distribution the taxes and governmental charges payable by holders and may sell any and all property on deposit to pay the taxes and governmental charges payable by holders. You will be liable for any deficiency if the sale proceeds do not cover the taxes that are due.

 

The depositary may refuse to issue ADSs, to deliver, transfer, split and combine ADRs or to release securities on deposit until all taxes and charges are paid by the applicable holder. The depositary and the custodian may take reasonable administrative actions to obtain tax refunds and reduced tax withholding for any distributions on your behalf. However, you may be required to provide to the depositary and to the custodian proof of taxpayer status and residence and such other information as the depositary and the custodian may require to fulfill legal obligations.

You are required to indemnify us, the depositary and the custodian for any claims with respect to taxes based on any tax benefit obtained for you.

 

We intend to make distributions in U.S. dollars. To the extent any distributions are made in currencies other than U.S. dollars, the depositary will arrange for the conversion of all non-U.S. currency received into U.S. dollars if such conversion is practical, and it will distribute the U.S. dollars in accordance with the terms of the deposit agreement. You may have to pay fees and expenses incurred in converting foreign currency, such as fees and expenses incurred in complying with currency exchange controls and other governmental requirements.

 

If the conversion of foreign currency is not practical or lawful, or if any required approvals are denied or not obtainable at a reasonable cost or within a reasonable period, the depositary may take the following actions in its discretion:

 

 

 

Your rights as a stockholder of Ensco Delaware are governed by the DGCL and Ensco Delaware’s certificate of incorporation and bylaws. After the merger, you, through your ownership of ADSs and subject to the terms of the deposit agreement, will have the rights of a shareholder of Ensco UK, and your rights will generally be governed by English law and Ensco UK’s articles of association.

 

The economic and voting rights of Ensco Delaware common stock and the ADSs representing Class A Ordinary Shares are similar. However, there are differences between your rights under the DGCL and under applicable English law. In addition, there are differences between Ensco Delaware’s certificate of incorporation and bylaws and Ensco UK’s articles of association.

 

The following discussion is a summary of the material differences in your rights that would result from the merger and assuming you hold Class A Ordinary Shares. As such, this summary does not cover all the differences between applicable English law and the DGCL affecting corporations and their stockholders or all of the differences between Ensco Delaware’s certificate of incorporation and bylaws and Ensco UK’s articles of association. While we believe this summary is accurate in all material respects, the following descriptions are qualified in their entirety by reference to the complete text of the relevant provisions of applicable English law, the DGCL, Ensco Delaware’s certificate of incorporation and bylaws and Ensco UK’s articles of association. We encourage you to read those laws and documents. A copy of Ensco UK’s articles of association is attached to this proxy statement/prospectus as Annex B. For information as to how you can obtain a copy of Ensco Delaware’s certificate of incorporation and bylaws, see “Where You Can Find More Information.” Further, to exercise some of the rights reserved to registered holders of Class A Ordinary Shares, you would need to surrender your ADSs and withdraw the underlying Class A Ordinary Shares. See “Description of American Depositary Shares of Ensco UK—Withdrawal of Class A Ordinary Shares Upon Cancellation of ADSs.”