By Lisa Kerner
Charlotte, N.C., April 21 - The boards of directors of Grey Wolf, Inc. and Basic Energy Services, Inc. approved a definitive agreement to combine the two companies in a merger of equals.
According to a joint news release, the total estimated enterprise value of the combined company will be $2.9 billion, based on closing prices for each company's common stock on April 18.
Approximately $600 million in cash will be returned to the combined shareholder base, the release said.
The agreement calls for Grey Wolf shareholders to receive $1.82 in cash and 0.25 of a share of new Grey Wolf common stock for each share of Grey Wolf they currently own or, based on the exchange ratio, one share of new Grey Wolf for each four shares of Grey Wolf held in addition to the cash consideration.
Basic Energy Services shareholders will receive $6.70 in cash and 0.9195 of a share of new Grey Wolf for each share of Basic Energy Services they currently own, according to the release.
The transaction is expected to close in the third quarter of 2008.
The combined company, Grey Wolf, Inc., will be based in Houston. It will trade on the New York Stock Exchange under the symbol "GW."
The total number of shares outstanding of the combined company will be some 85 million.
Grey Wolf shareholders will own 54% of the new company, with Basic Energy Services shareholders owning the remaining 46%.
DLJ Merchant Banking Partners III, LP and its affiliated funds, holders of approximately 44% of the outstanding shares of Basic Energy Services, agreed to vote in favor of the transaction.
Current Grey Wolf chairman, president and chief executive officer Thomas P. Richards will be the chairman of the new Grey Wolf, and Ken Huseman, Basic Energy Services' CEO and president, will assume the role of CEO.
"Grey Wolf's premium land drilling rig fleet complements Basic Energy Services' premium land-based well servicing equipment," Richards said in the release.
With approximately 50% of Basic Energy Services' business focused on oil and about 95% of Grey Wolf's business focused on natural gas, the new company will benefit from a diversified revenue stream with exposure to both oil and gas opportunities, Richards noted.
Financing for the transaction will be provided by affiliates of UBS Investment Bank and Goldman, Sachs & Co.
The new Grey Wolf will have 7,500 employees as well as 395 well servicing and 130 drilling rigs.
Grey Wolf is being advised by UBS Investment Bank. Goldman Sachs is advising Basic Energy Services.
Simmons & Co. International provided a fairness opinion to the board of Grey Wolf, and Tudor, Pickering, Holt & Co. provided a fairness opinion to Basic Energy Services.
Basic Energy Services is the third-largest well servicing rig contractor in the United States. The company is located in Midland, Texas.
Houston-based Grey Wolf is the fourth-largest provider of contract land drilling services in the United States.
| Acquirer: | Grey Wolf, Inc.
|
| Target: | Basic Energy Services, Inc.
|
| Announcement date: | April 21
|
| Transaction total: | $2.9 billion
|
| Price per share: | $1.82 in cash and 0.25 of a new Grey Wolf share for Grey Wolf shareholders; $6.70 in cash and 0.9195 of a new Grey Wolf share for Basic Energy Services shareholders
|
| Expected closing: | Third quarter of 2008
|
| Stock price for acquirer: | Amex: GW: $7.60 on April 18
|
| Stock price of target: | NYSE: BAS: $25.77 on April 18
|
© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere.
For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.
