Precision Drilling Corp., Calgary, (NYSE: PDS) plans to buy all of GlobalSantaFe Corp.'s (NYSE: GSF) worldwide land drilling assets for US$316.5 million in cash. The transaction is anticipated to be completed this quarter. The sale includes 31 land rigs in the Middle East, North Africa and South America, and a fleet of specialized rig transport equipment that supports land rig operations in Kuwait and the Kuwaiti-Saudi Arabia Partitioned Neutral Zone. For Precision, the deal helps the company grow its international presence, long a publicly stated goal. For Houston-based GlobalSantaFe, the sale allows it to focus on the offshore. Robert Ford, an analyst with Sanders Morris Harris, says the purchase could be dilutive to Precision's earnings per share by 4 cents in 2004 and 7 cents in 2005. However, if the company finances the deal with a convertible offering, or is able to improve operating results, the deal could be accretive by 5 cents in 2004 and 14 cents in 2005. The company has not announced how it intends to fund the purchase. Precision is paying full price for the fleet, Ford says. "Though there are few direct synergies associated with the purchase, we believe the company was willing to pay a premium to attain new geographic markets in which to market its other products." From GlobalSantaFe's point of view, the transaction is positive, says Angeline Sedita, an analyst with Lehman Brothers. The sale should have a negligible impact on earnings, with income from proceeds largely offsetting lost income from land drilling, she says. "GlobalSantaFe will be able to use the proceeds of the sale to fund its offshore expansion with one jackup and two semisubmersibles scheduled for completion in the next 18 months." Standard & Poor's Ratings Services says the sale would not affect GlobalSantaFe's debt ratings. Simmons & Co. International was financial advisor to GlobalSantaFe for this transaction.