Grey Wolf shareholders say 'no' to deal with Basic Energy; merger agreement terminated

By Lisa Kerner

Charlotte, N.C., July 15 - Basic Energy Services, Inc. and Grey Wolf, Inc. terminated their April 20 merger agreement after Grey Wolf's shareholders failed to approve the transaction at a special meeting on July 15.

According to Basic Energy, its shareholders approved the agreement at a separate meeting on the same day.

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 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, 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 currently own, it was already noted.

Grey Wolf said its board of directors will now review alternatives for enhancing shareholder value with the assistance of UBS Investment Bank.

Alternatives include remaining independent, strategic alliances, joint ventures, financial alternatives, mergers, acquisitions and a sale of the company, a Grey Wolf news release stated.

The company cautioned that there is no assurance that the review process will result in a specific transaction.

Grey Wolf's board believed that the addition of Basic Energy's complementary business and assets would have been an excellent strategic fit and would have created significant value, according to chairman, president and chief executive officer Thomas P. Richards.

In a separate news release, Basic Energy president and CEO Ken Huseman said, "With the termination of the merger agreement, Basic Energy can now return to our focus of building value for our shareholders as we address numerous opportunities to build our business through acquisitions, expansion of our footprint and internal growth within our established markets."

In June, Grey Wolf announced it had rejected an unsolicited proposal from Precision Drilling Trust to acquire the company for $10.00 per share in cash and trust units.

According to a Grey Wolf, the proposal was not reasonably likely to result in a proposal superior to Basic Energy's offer.

Previously, Grey Wolf rejected two prior offers from Precision Drilling, one for $9.00 per share and one for $9.30 per share.

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.

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