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The Wall Street Journal: Oil Rigger Abbot Agrees to Buyout By Management

A WSJ NEWS ROUNDUP
December 20, 2007

LONDON — Oil-rig operator Abbot Group PLC agreed to a £906 million ($1.82 billion) management buyout backed by U.S.-based private-equity firm First Reserve Corp.

Shares of Abbot, which announced Oct. 4 that it was in takeover talks, rose 14% to 379.50 pence ($7.64) in London trading, below the offer price of 390 pence a share.

Abbot’s executive chairman, Alasdair Locke, said First Reserve’s “combination of capital and industry knowledge will aid considerably the long-term development of Abbot and its employees, as well as the investment and growth plans that management have for the business.”

Abbot’s independent directors said the deal was “fair and reasonable and is in the best interests of Abbot shareholders.”

The investors include Mr. Locke, who owns 13% of Abbot and is set to invest £25 million in Turbo Cayman, which owns Turbo Alpha Ltd., the vehicle being used by First Reserve to effect the takeover.

Abbot was advised by J.P. Morgan Cazenove and Rothschild, and Turbo Alpha by UBS AG and Simmons & Co. International.

First Reserve, which specializes in energy assets, has made several significant acquisitions in the past two years — including Brand Energy & Infrastructure Services of the U.S. and U.K. offshore oil-and-gas equipment maker Acteon Group Ltd.

The Abbot deal comes as private-equity firms and companies backed by private equity are increasingly acting as consolidators in the energy sector. In August, Royal Dutch Shell PLC agreed to sell three French refineries to Dutch petrochemical group Basell International Holdings BV and Swiss refiner Petroplus Holdings AG. Basell is owned by Access Industries, a holding controlled by billionaire Len Blavatnik, while Petroplus is backed by Carlyle Group.

The appetite for energy assets is such that John Browne, a former head of British oil major BP PLC, was appointed managing director of the European branch of U.S. private-equity energy specialists Riverstone Holdings LLC this summer.

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