Transocean, GlobalSantaFe to Merge

Transocean Inc. and GlobalSantaFe Corporation said that their boards of directors have unanimously approved a definitive agreement for a merger of equals. Based upon closing prices for each company's ordinary shares as of July 20, 2007, the estimated enterprise value of the combined company would be approximately $53 billion. The combined company, to be known as Transocean Inc., will retain principal offices in Houston and trade on the New York Stock Exchange with the symbol RIG.

Under the terms of the agreement, Transocean shareholders will receive $33.03 in cash and 0.6996 shares of the combined company for each share of Transocean they own. GlobalSantaFe shareholders will receive $22.46 in cash and 0.4757 shares of the combined company for each share of GlobalSantaFe they own. The total number of shares outstanding of the combined company after the transaction will be approximately 318 million shares.

The combined current revenue backlog of $33 billion, together with the greater financial strength of the combined company, will enable a $15 billion recapitalization while retaining the financial flexibility to invest for future growth. Financing by affiliates of Goldman, Sachs & Co. and Lehman Brothers Inc. will provide for shareholders of both companies to receive an aggregate payment of $15 billion in cash. The combined company intends to dedicate its first two years of free cash flow to reducing debt.

The combination will create an organization with approximately 20,000 personnel, providing a full range of offshore drilling services in the world's key regions. The combined company will have a technologically advanced fleet with a substantial presence in ultra-deepwater and deepwater drilling and additional growth from newbuild rigs.

"GlobalSantaFe's outstanding rig fleet complements Transocean's, and the combined company will have a global fleet of 146 rigs,” said Robert L. Long, who will continue to serve as CEO of Transocean after the merger. “This transaction will enhance our high-end floater fleet, including five newbuild ultra-deepwater units, while growing our position in the worldwide jackup market, especially in the Middle East, West Africa and the North Sea. In addition, we will be positioned to better offer the full scope of drilling services to customers in all geographical areas as we focus on incident-free, efficient operations and further developing our talented workforce. GlobalSantaFe has an outstanding management team, as well as operational and support staff, which when combined with Transocean's will produce a top-notch team."

"This is an exciting opportunity for our shareholders, our customers and our people,” said current GlobalSantaFe President and CEO Jon A. Marshall, who will serve as Transocean's President and Chief Operating Officer following the merger. “The $15 billion cash payment allows us to achieve a more appropriate capital structure and deliver immediate value to our combined shareholders. The combined company will have a broader customer base, particularly with the increasingly important national oil companies, greater exposure to the growing deepwater business and increased, low-risk organic growth prospects from the combined deepwater newbuild program. The enhanced operational capability of a more geographically diverse rig fleet will produce significant benefits for our customers and provide substantial growth opportunities for our people.

This is an ideal fit for the stakeholders in both companies." Following the merger, Robert E. Rose, currently GlobalSantaFe's Chairman, will serve as Transocean's Chairman of the Board of Directors, Robert L. Long will continue as Transocean's Chief Executive Officer and Jon A. Marshall will assume the position of President and Chief Operating Officer. Other senior management positions will be named later.

Under the terms of the merger agreement, each ordinary share of Transocean held by an existing Transocean shareholder will be converted into total consideration equal to $33.03 in cash and 0.6996 ordinary shares of the combined company. GlobalSantaFe shareholders will receive total consideration of $22.46 in cash and 0.4757 ordinary shares of the combined company for each ordinary share of GlobalSantaFe held. The aggregate total cash paid to both companies' shareholders will be $15 billion, which will be funded through a bridge loan due one year after closing. Transocean has received a commitment letter from Goldman, Sachs & Co. and Lehman Brothers Inc. providing for this financing. Transocean expects to refinance the bridge loan with a mix of bank loans and debt securities.

The transaction is expected to close by the end of 2007, subject to the approval of the shareholders of both companies, regulatory clearances, receipt of funds under the committed financing and other closing conditions. It is anticipated that the shareholders of both Transocean and GlobalSantaFe will be subject to tax only with respect to the cash received by them. The cash received by Transocean shareholders will be accounted for as a special dividend in combination with a reverse stock split.

Advisors

Goldman, Sachs & Co. is acting as financial advisor to Transocean, and Lehman Brothers Inc. is acting as financial advisor to GlobalSantaFe. Simmons & Company International provided a fairness opinion to the board of GlobalSantaFe. Baker Botts L.L.P. is acting as legal counsel to Transocean, and Skadden, Arps, Slate, Meagher & Flom LLP is acting as legal counsel to GlobalSantaFe.