By Lisa Kerner
Charlotte, N.C., Aug. 25 - Precision Drilling Trust agreed to acquire Grey Wolf, Inc. in a deal that gives Grey Wolf shareholders $5.00 per share in cash plus 0.1883 newly issued Precision trust units.
The boards of directors of both companies unanimously approved the definitive merger agreement, according to a Grey Wolf news release.
Precision said it expects to pay a maximum of $1.12 billion with the maximum number of units expected to be 42 million. The maximums take into account the conversion of Grey Wolf's convertible debt securities and stock options, totaling approximately 223 million fully diluted Grey Wolf shares.
Precision has received commitments from Deutsche Bank Securities, Royal Bank of Canada, HSBC Bank and Toronto Dominion Bank to finance the cash portion of the transaction.
According to Grey Wolf, its shareholders will own about 25% of the combined company, which will have land drilling operations in most every conventional and unconventional oil and gas basin in the lower 48 United States and Canada as well as an emerging presence in Mexico.
The agreement follows Grey Wolf's previously announced review of strategic alternatives.
In June, Grey Wolf announced it had rejected an unsolicited proposal from Precision Drilling to acquire the company for $10.00 per share in cash and trust units. Grey Wolf rejected two prior offers from Precision Drilling, one for $9.00 per share and one for $9.30 per share.
The transaction should close by the end of 2008.
Once the merger is completed, Precision's headquarters location will remain in Calgary, Alta., and its U.S. operations will be based in Houston. Precision will maintain Grey Wolf's principal offices and use the Grey Wolf name for a period of time, the release stated.
Three of the current Grey Wolf directors will be added to the board of directors of Precision. Grey Wolf executive vice president and chief operating officer David Crowly will lead Precision's contract drilling operations leadership team in the United States.
Deutsche Bank Securities Inc. and RBC Capital Markets advised Precision, and Grey Wolf was advised by UBS Investment Bank.
In July, Grey Wolf terminated an April 20 merger agreement with Basic Energy Services, Inc. after its shareholders rejected the offer. The agreement with Basic Energy called 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, it was previously reported.
Basic Energy shareholders would have received $6.70 in cash and 0.9195 of a share of new Grey Wolf for each share of Basic Energy they owned, it was already noted.
Precision Drilling is a Calgary, Alta., oil and gas drilling and exploration company.
Houston-based Grey Wolf is the fourth-largest provider of contract land drilling services in the United States.
Basic Energy is the third-largest well servicing rig contractor in the United States. The company is located in Midland, Texas.
| Acquirer: | Precision Drilling Trust
|
| Target: | Grey Wolf, Inc.
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| Announcement date: | Aug. 25
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| Price per share: | $5.00 in cash plus 0.1883 newly issued Precision trust units
|
| Expected closing: | End of 2008
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| Stock price for acquirer: | NYSE: PDS: $21.35 on Aug. 22
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| Stock price for target: | Amex: GW: $8.59 on Aug. 22
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