NOV Distribution Services ULC ("NDS") - a wholly owned ancillary
National Oilwell Varco Inc.
) announced the completion of the acquisition of Canadian oil and
gas production equipment supplier
CE Franklin Ltd.
). The announcement of this deal was first made in late May.
CAMERON INTL (CAM): Free Stock Analysis Report
CE FRANKLIN LTD (CFK): Free Stock Analysis
NATL OILWELL VR (NOV): Free Stock Analysis
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Following the approval of CE Franklin shareholders and the Court of
Queen's Bench of Alberta on July 16, NDS acquired all the issued
and outstanding common shares of CE Franklin for a cash payment of
C$12.75 per share, netting C$239 million.
CE Franklin -shares of which are expected to be delisted from the
TSX and NASDAQ by the end of July 2012 - will operate as a wholly
owned subsidiary of NDS.
Calgary-based CE Franklin, through 39 branches in western Canada,
used to be a distributor of more than 25,000 products - including
pipes, valves, flanges, fittings and other equipment - that cater
to over 3,000 clients in the energy industry.
We expect this acquisition to immensely benefit National Oilwell
Varco through a broader scale and scope of the solutions that it
offers to oil and gas customers worldwide. CE Franklin's products
and services will likely enhance the Canadian business market of
National Oilwell Varco via new offerings and customer base.
Houston, Texas based National Oilwell Varco plans to release its
second quarter results on July 26, 2012, before the start of
The Zacks Consensus earnings estimate for the quarter is $1.40 per
share, on revenue of $4,446 million.
We believe that National Oilwell Varco remains better positioned to
navigate the uncertain environment than many of its peers, given
its strong balance sheet, backlog of over $10 billion, leading
market position and technology innovation.
However, we remain somewhat cautious about the company's
performance in the coming months, considering its sensitivity to
the gas/oil price volatility, as well as exploration and production
spending patterns, costs, international business risks and failure
to adapt to technological changes.
We maintain our long-term Neutral recommendation on the stock.
National Oilwell Varco, which ranks ahead of
Cameron International Corp.
) as the biggest U.S. maker of oilfield equipment, currently holds
a Zacks #3 Rank (Hold), reflecting a short-term Hold rating for a
period of one to three months.