Rowan Companies Inc. (RDC), the offshore drilling contractor planning to move its legal domicile to the U.K., rose the most in more than eight months after announcing it will delay the proposed shift until next month in an effort to stay on the Standard & Poor’s 500 Index. (SPX)
The shares climbed 9.7 percent to $33.99 at the close in New York, the most since Aug. 9.
The company needs more time to complete the paperwork to stay in the “prestigious” S&P 500 Index, Suzanne Spera, a spokeswoman for the Houston-based drilling contractor, said in a telephone interview today.
“There’s only so many slots” on the index, she said. “We’d prefer not to lose that. There are shareholders who are sensitive to that.”
Rowan is pursuing a plan to exchange current shares for Class A shares in order to remain in the S&P 500 Index on the New York Stock Exchange, according to a statement earlier today. It originally planned to exchange U.S. stock for American depositary shares.
“If they’re able to achieve this Class A share structure, we shouldn’t see the selling pressure as the index funds would not be forced to sell,” Trey Stolz, an analyst at Iberia Capital Partners in New Orleans, said in a telephone interview. He rates the shares at outperform, which means investors should buy the stock, and owns none, he said.
The company is moving to be closer to customers in the U.K., Europe and Egypt. About 81 percent of sales this year are expected to come from outside the U.S., up from 10 percent in 2004, the company said Feb. 28.
The move requires the support of a majority of shareholders, expected at an April 16 meeting. Rowan is legally domiciled in Delaware and wants to change that to the U.K. No senior management will relocate, Chief Executive Officer Matt Ralls said on conference call on Feb. 28.
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