Large-cap oilfield services company
National Oilwell Varco Inc.
) has agreed to acquire Canadian oil and gas production equipment
CE Franklin Ltd.
) for about C$240 million ($233.08 million) in cash.
The transaction has been approved by the boards of both the
companies but awaits regulatory and shareholder approval. In
particular, the deal needs the go-ahead of at least two-thirds of
CE Franklin shareholders at a special meeting scheduled for
mid-July. We expect the buyout to conclude shortly after the
The world's biggest oilfield services provider,
), CE Franklin's largest shareholder, together with the firm's
directors and executive officers - that collectively control 57% of
the shares - have agreed to vote in favor of the transaction.
CE Franklin is obligated to pay a termination fee of $7.5
million to National Oilwell Varco in case it accepts a superior
offer though the company said it would not solicit other
As per the deal, CE Franklin shareholders would get C$12.75 in
cash for each share they hold. At CE Franklin's Wednesday closing
stock price of C$9.35 on the Toronto Stock Exchange, the deal
values the company's shares at a 36% premium.
Calgary-based CE Franklin, through 39 branches in western
Canada, is 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.
The acquisition will allow National Oilwell Varco to broaden
scale and scope of the solutions that it offers to oil and gas
customers worldwide. Post merger, National Oilwell Varco expects CE
Franklin's products and services to benefit its Canadian business
through new offerings and customer base.
National Oilwell Varco, which ranks ahead of
Cameron International Corp.
) as the biggest U.S. maker of oilfield equipment, is currently a
Zacks #3 Rank (Hold) stock, implying that it is expected to perform
in line with the broader U.S. equity market over the next one to
three months. We are also maintaining our long-term Neutral
recommendation on the stock.
CAMERON INTL (CAM): Free Stock Analysis Report
CE FRANKLIN LTD (CFK): Free Stock Analysis
NATL OILWELL VR (NOV): Free Stock Analysis
SCHLUMBERGER LT (SLB): Free Stock Analysis
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