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Lamprell to Fund Cash Offer for MIS Through Rights Offer

Lamprell Plc will use a rights offer, debt and cash to acquire Dubai-based rig maker, Maritime Industrial Services Co. The shares of both companies surged.

The 3-for-10 rights issue will be offered at 232 pence per share to raise as much as 139.4 million pounds ($225 million), the Douglas, Isle of Man-based oil-and-gas-rig builder said in a statement. The rights offer will be fully underwritten by J.P. Morgan Cazenove, HSBC and Merrill Lynch International.

“This transaction will rapidly create value for our shareholders,” Lamprell Chief Executive Officer Nigel McCue said in a statement. “We can demonstrate the merits of bringing together these two businesses both through new business opportunities and operational and financial synergies.”

The acquisition represents growing interest in the offshore drilling industry in the past year as oil prices have surged. Earlier this week American miner Joy Global Inc. agreed to buy LeTourneau Technologies Inc. for $1.1 billion.

MIS rose as much as 26 percent to 37.7 kroner in Oslo, the most in 14 months, while Lamprell gained as much as 15 percent to 405 pence in London, the biggest jump since September.

“The return on invested capital in the first full year of ownership will at least match Lamprell’s cost of capital and exceed it thereafter,” Lamprell said in the statement.

The consideration for each share under the offer will be 38 kroner payable in cash, valuing the share capital of MIS at about 1.87 billion kroner ($337 million). The MIS board recommended that shareholders accept the offer, it said in a statement.

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