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Exit GlobalSantaFe Position

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Transocean and GlobalSantaFe Merge

RIG and GSF announced a merger of equals this morning but they are hardly equals. GSF is only half the size of RIG but the combination of the two will create a powerful force in the offshore drilling industry. The deal makes it even more likely that some of the smaller companies will begin to see themselves as acquisition targets. Atwood Oceanics (ATW) a current LEAP position saw its stock jump +$5.44 on expectations that it would be next. We added ATW as a potential takeover target and the odds are getting better. Another potential target is Pride International (PDE). They are not a current position but might be of interest to those readers with IRA accounts. It moves too slowly for LEAPS.

The GSF/RIG merger has limited the expectations for any further gains in GSF stock. The price is locked in and it is not likely somebody else will step up with a better offer. I am recommending we exit the position today and take a small profit before all the premium in our LEAP evaporates.

Jim Brown

Leaps Trader Intra-Week Blog Archives