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Footnoted Scores Again With Pride International Takeover Deal

Lightning has struck twice in barely more than a week for Footnoted, a Morningstar subsidiary that forecasts mergers and acquisitions based on such factors as corporate filings with regulators. A second company on Footnoted's list of top 10 merger candidates for 2011, Pride International, has announced that it will be taken over.

Pride's stock (PDE) was trading below $33 a share in late January when my post went up highlighting Footnoted's takeover candidates just after one of them, Smurfit-Stone Container (SSCC), announced that it was being acquired. Pride soared more than 15 percent on Monday, closing at $39.80, after the announcement that Ensco (ESV), a rival oil and gas drilling company, plans to buy Pride for about $7.3 billion, or $41.60 a share. If the agreement is consummated, it will create the world's second-largest offshore oil and gas driller, according to Reuters.

One interesting footnote to Footnoted's prediction is that it got the "what" right, even though its analysts had a different "who" in mind. "There has been no shortage of chatter about Pride International being a possible acquisition target," the Footnoted report observed. "An oft-mentioned suitor is Seadrill Limited (SDRL), which is twice as big and operates drills in many of the same parts of the world where Pride's drills currently operate. Part of that is due to the fact that Seadrill already owns 9.4 percent of Pride's stock. But now Seadrill may be poised to nearly double its stake in Pride."

Seadrill apparently wasn't interested, or at least not interested enough. If Pride were the only one of the 10 takeover candidates that was the subject of an agreement, it could be dismissed as luck. The fact that deals have been announced for two of the 10 - and in less than a month after the report was published - suggests that Footnoted's analysts know what they're talking about and that the other eight candidates on the list bear watching.

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