By Lisa Kerner
Charlotte, N.C., Dec. 17 - National Oilwell Varco, Inc. agreed to acquire Grant Prideco, Inc. in a cash and stock deal, it was announced on Monday.
The expected equity market capitalization of the combined company is $32 billion.
Under the Houston-based companies' definitive agreement, Grant Prideco shareholders will receive $23.20 in cash and 0.4498 of a share of National Oilwell per share of Grant Prideco, for a total consideration of $58.00 per share based on closing share prices on Dec. 14.
National Oilwell said it plans to finance the cash portion of the deal through a combination of cash on hand and debt. Bank commitments for the debt have been secured.
The merger is expected to close following the Grant Prideco stockholder meeting late in the first quarter or early in the second quarter of 2008.
Following the transaction's close, National Oilwell stockholders will own some 86% of the combined company, with Grant Prideco stockholders owing approximately 14%.
The transaction is not expected to impact Grant Prideco's pending sale of its tubular businesses to Vallourec SA, a company news release stated.
National Oilwell was advised by Goldman, Sachs & Co., while Credit Suisse Securities (USA) LLC advised Grant Prideco.
"We believe Grant Prideco's product range will add new growing market segments to National Oilwell Varco and benefit our customers' needs worldwide," National Oilwell chairman, president and chief executive officer Pete Miller said in the release.
"This is a great transaction for our shareholders in which they realize a significant premium and have the opportunity to participate in a larger, more diverse company," Grant Prideco chairman, president and CEO Michael McShane added.
National Oilwell manufactures and sells equipment and components used in oil and gas drilling and production operations.
Grant Prideco specializes in drill bits, drill stem technology and specialty tools for the oil and gas industries.
| Acquirer: | National Oilwell Varco, Inc.
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| Target: | Grant Prideco, Inc.
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| Announcement date: | Dec. 17
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| Transaction total: | Equity value of combined company will be $32 billion
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| Price per share: | $23.20 in cash and 0.4498 of a National Oilwell share
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| Expected closing: | Late first quarter or early second quarter of 2008
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| Stock price for acquirer: | NYSE: NOV: $77.37 on Dec. 14
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| Stock price of target: | NYSE: GRP: $47.46 on Dec. 14
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