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Apr-21-2008Grey Wolf, Basic Energy to merge(topic overview)
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The estimated enterprise value of the combined company, which will be named Grey Wolf Inc., would be about $2.9 billion. Under the terms of the agreement, Grey Wolf shareholders will receive $1.82 in cash and 0.25 shares of the new company for each share of Grey Wolf they currently own. Basic Energy Services shareholders will receive $6.70 in cash and 0.9195 shares of the new company for each share of Basic Energy Services they currently own. [1] The new company will be christened Grey Wolf, Inc. and trade on the New York Stock Exchange under the symbol 'GW'. Under the deal, Grey Wolf shareholders will receive $1.82 in cash and 0.25 shares of new Grey Wolf for each share of Grey Wolf they own, while each Basic Energy share will be swapped for $6.70 in cash and 0.9195 shares of the new Grey Wolf.[2]
The two companies plan to merge into a new entity that would be majority owned by Grey Wolf shareholders. It would combine Grey Wolf's land-drilling rig fleet with Basic Energy's land-based well servicing equipment. Under the deal, Grey Wolf investors will exchange each of their shares for $1.82 in cash and 0.25 share of the new company.[3]
Basic Energy Services shareholders will get $6.70 in cash and 0.9195 shares in the new company for each current share. Both sides describe the transaction as a "merger of equals," although the new nine-member board of directors will have five directors nominated by Grey Wolf and four by Basic Energy Services.[4] Grey Wolf shareholders will own 54% of the combined company, while Basic Energy Services shareholders will own 46%. The new company plans to return $600 million in cash to the combined shareholder base and the financing will be provided by affiliates of UBS Investment Bank and Goldman, Sachs & Co. The new Grey Wolf will be have its corporate offices in Houston, and establish incorporation in the state of Delaware.[2] The financing will be provided by affiliates of UBS Investment Bank and Goldman, Sachs & Co. The cash is being issued to the two sets of shareholders proportionate to pro forma ownership of the combined company, which will be approximately 54% owned by current Grey Wolf shareholders and 46% owned by current Basic Energy Services shareholders.[5]
Grey Wolf ' s premium land drilling rig fleet complements Basic Energy Service ' s premium land-based well servicing equipment. With approximately 50% of Basic Energy Service ' s business focused on oil and approximately 95% of Grey Wolf ' s business focused on natural gas, this transaction results in a company with a diversified revenue stream in terms of exposure to oil and gas opportunities, involvement through the life of the well from drilling to production to well abandonment and a very broad geographic coverage, all of which is consistent with our stated strategic goal. We are confident that our valued customers will respond positively to this merger with the combined company ' s enhanced ability to satisfy their needs. Grey Wolf has an outstanding management team, as well as operational and support staff, which when combined with Basic Energy Services ' organization, will produce a best-in-class team[5] The company will direct cash flow to paying down debt and new projects, according to a news release. It will employ about 7,500 people and will have 395 well-servicing and 130 drilling rigs. Richards, currently chairman and CEO of Grey Wolf, said his company's land drilling fleet complements Basic Energy Services' well-servicing expertise and equipment. "With approximately 50 percent of Basic Energy Service's business focused on oil and approximately 95 percent of Grey Wolf's business focused on natural gas, this transaction results in a company with a diversified revenue stream in terms of exposure to oil and gas opportunities," he said in a statement.[4]
Grey Wolf's current chairman, Tom Richards, will serve as chairman of the new company; Ken Huseman, president and chief executive officer of Basic Energy Services, will be CEO; and David Crowley, chief operating officer of Grey Wolf, will be president and COO. Contact the Editor Need Assistance? [6] Tom Richards from Grey Wolf will be chairman of the new company, while Ken Huseman from Basic Energy Services will be CEO. The 9-member Board of Directors will have representation approximately proportionate to ownership with 5 directors nominated by Grey Wolf and 4 nominated by Basic Energy Services.[7]
The 9-member Board of the new company will have 5 directors nominated by Grey Wolf and 4 by Basic Energy Services. The deal is expected to close in the third quarter, subject to shareholder approval from both companies, receiving financial proceeds, regulatory approvals and other customary closing conditions.[2] The combined company will have greater financial flexibility and be able to return about $600 million in cash to shareholders and invest for future growth, Grey Wolf and Basic Energy said.[3] Following the merger, in addition to the executive officers listed above, Bob Proffit, current Senior Vice President, Human Resources of Grey Wolf, will assume the role of Senior Vice President, Administration at the combined company and Spencer Armour, current Senior Vice President, Corporate Development of Basic Energy Services, will remain in the same role at the combined company. Operating level officers for both companies will continue in their current roles.[5] Ken Huseman, who will serve as Chief Executive Officer of Grey Wolf, Inc. after the merger, said, " This combination achieves the goal of moving Basic Energy Services forward in achieving a size which allows the combined company to compete effectively for expansion opportunities anywhere in the world while continuing to build upon the existing footprint of both companies.[5]
Copies of the registration statement and the proxy statement/prospectus and the SEC filings that will be incorporated by reference therein may also be obtained for free by directing a request to either Investor Relations, Basic Energy Services, Inc., (432) 620-5510 or to Investor Relations, Grey Wolf, Inc., (713) 435-6100. Basic Energy Services and Grey Wolf and their respective directors, officers and certain other members of management may be deemed to be participants in the solicitation of proxies from their respective stockholders in respect of the mergers. Information about these persons can be found in Grey Wolf ' s proxy statement relating to its 2008 annual meetings of stockholders as filed with the SEC on April 8, 2008. Information concerning beneficial ownership of Basic Energy Services stock by its directors and certain of its executive officers is included in its proxy statement dated April 5, 2007 and subsequent statements of changes in beneficial ownership on file with the SEC. Additional information about the interests of such persons in the solicitation of proxies in respect of the merger will be included in the registration statement and the joint proxy statement/prospectus to be filed with the SEC in connection with the proposed transaction.[5]
Grey Wolf, Inc. ("Grey Wolf") (AMEX:GW) and Basic Energy Services, Inc. ("Basic Energy Services") (NYSE:BAS) today announced that their Boards of Directors have approved a definitive agreement to combine the two businesses in a " merger of equals ".[5]
Pro forma sales (for the full year ending 12/31/07) would be approximately 53% from contract drilling, 19% from well servicing, 15% from fluid services and 13% from completion and remedial services. Current Grey Wolf Chairman, President and CEO, Thomas P. Richards, who will serve as Grey Wolf, Inc.' s Chairman following the merger, said: "This is an exciting opportunity for our shareholders, our customers and our people.[5] The combined company will have 395 well servicing and 130 drilling rigs as well as a suite of other oilfield service assets, pro forma sales and EBITDA of approximately $1,784 million and $632 million, respectively (for the full year ending 12/31/07).[8] The merged entity will have 395 well servicing and 130 drilling rigs, about 7500 employees, and pro forma sales of about $1.78 billion and pro forma debt of about $960 million for the full year ending Dec 31, 2007.[2]
Pro forma sales (for the full year ending 12/31/07) would be approximately 53% from contract drilling, 19% from well servicing, 15% from fluid services and 13% from completion and remedial services.[8]
The new company will have 7,500 employees and have 395 well servicing and 130 drilling rigs and other oilfield service assets.[6] The merged company, to be called Grey Wolf Inc, would have 7,500 employees, 395 well-servicing and 130 drilling rigs, as well as other oilfield service assets.[3]
PHILADELPHIA, April 21 (Reuters) - Natural gas drilling services provider Grey Wolf Inc (GW.A: Quote, Profile, Research ) said on Monday that it would acquire oil and gas well-services company Basic Energy Services Inc (BAS.N: Quote, Profile, Research ).[3] Grey Wolf and Basic Energy Services said today they're merging into a new Houston-based oilfield services company under the old Grey Wolf name.[4]
The transaction is expected to close in the third quarter of 2008. Completion of the transaction is subject to shareholder approval at both Grey Wolf and Basic Energy Services, receipt of financing proceeds, regulatory approvals and other customary conditions.[5]
The deal amounts to a $1.4 billion acquisition by Grey Wolf, to be paid in cash and stock. It calls for Grey Wolf shareholders to receive $1.82 in cash and a quarter-share of new Grey Wolf stock for each share they currently own.[4] Terms of the agreement give shareholders of Houston-based Grey Wolf (AMEX: GW) $1.82 in cash and 0.25 shares of the new company for every share owned.[6]
Midland-based Basic Energy (NYSE: BAS) shareholders will receive $6.70 in cash and about 0.92 shares of the new company for every share owned.[6]
In midday trading today on the New York Stock Exchange, shares in Basic Energy Services were up 29 cents, or 1 percent, to $26.08.[4] Shares of Basic Energy Services, a Midland, Texas-based well servicing rig contractor, closed at $25.77.[1] Founded in 1992, Basic Energy Services has grown to be the nation ' s third largest well servicing rig contractor with more than 4,600 employees in 11 states.[5]
Huseman said the deal broadens the reach of Basic Energy Services' assets. "In addition, the cash consideration allows us to provide each companies' shareholders with a meaningful financial return without unduly limiting the growth potential for the combined entity," he said. "This is an ideal fit for the stakeholders in both companies."[4] Commenting on the deal, the companies said that the greater financial strength of the combined company will enable it to return approximately $600 million in cash to the combined shareholder base while retaining financial flexibility to invest for future growth.[7]
Pro forma net debt as of December 31, 2007 will be approximately $960 million. The combined company intends to dedicate a substantial amount of its free cash flow to the repayment of the debt while at the same time fully funding and implementing its significant, value-adding growth initiatives.[8] The combined company would also have pro forma sales and EBITDA of approximately $1.784 billion and $632 million, respectively for the full year ending December 31 2007.[7]
Based upon April 18 closing stock prices, the enterprise value of the combined company is estimated at about $2.9 billion. [2]
The new company, which will be named Grey Wolf Inc., will have its headquarters in Houston and will trade on the New York Stock Exchange under the symbol GW.[6] UBS Investment Bank is acting as exclusive financial advisor to Grey Wolf on the deal and Goldman, Sachs & Co. is acting as exclusive financial advisor to Basic Energy Services.[2] BOSTON, Apr. 21, 2008 (Thomson Financial delivered by Newstex) -- Grey Wolf Inc. (AMEX:GW) and Basic Energy Services Inc. (NYSE:BAS) said Monday they agreed to combine their two businesses.[1]
The senior management of Grey Wolf and Basic Energy Services will host a conference call on Monday, April 21, 2008 at 11:00 a.m. Eastern Daylight Time.[5] Porter & Hedges, L.L.P. and Gardere Wynne & Sewell, LLP are acting as legal counsel to Grey Wolf, and Davis Polk & Wardwell and Andrews Kurth LLP are acting as legal counsel to Basic Energy Services.[5]
Grey Wolf shareholders will own 54 percent and Basic Energy shareholders, 46 percent.[3]
Shares of Grey Wolf, a Houston-based provider of contract land drilling services, closed Friday at $7.60.[1] Grey Wolf is the fourth largest provider of contract land drilling services in the United States. It serves major and independent oil and gas companies with a premium fleet of 121 rigs. Located in the nation ' s most productive natural gas regions, it operates in South Texas, the Gulf Coast, the Ark-La-Tex, Mississippi/Alabama, Mid Continent and Rocky Mountain areas on both a daywork and turnkey basis.[5]
From drilling to final abandonment, Basic Energy Services provides a range of well site services to America ' s oil and gas drilling and producing companies that support the entire life cycle of a well.[5]
DLJ Merchant Banking Partners III, L.P. and its affiliated funds, holders of approximately 44% of the outstanding shares of Basic Energy Services, have entered into a voting agreement agreeing to vote in favor of the transaction.[5] "We've been looking at each other for quite some time," Midland-based Basic Energy Services' president and CEO, Ken Huseman, told analysts today. "This didn't happen overnight."[4]
Management teams will be integrated, with Grey Wolf's Tom Richards becoming chairman and Huseman running the combined operation as chief executive. [4] Once merged, the new Grey Wolf will have about 85 million shares outstanding, according to the companies.[6] Approximately 95% of the wells drilled by Grey Wolf are targeted to natural gas.[5] Simmons & Company International provided a fairness opinion to the Board of Grey Wolf.[5] For more information about Grey Wolf, go to http://www.gwdrilling.com.[5]
The deal awaits regulatory and shareholder approval. Huseman said the companies expect to hold special shareholder meetings in July or August to allow their votes before the merger closes in the third quarter. [4] The cash consideration allows us to provide each companies ' shareholders with a meaningful financial return without unduly limiting the growth potential for the combined entity. This is an ideal fit for the stakeholders in both companies."[5]
The new company would have an enterprise value of $2.9 billion and about $960 million in debt. [4]
SOURCES
1. Grey Wolf, Basic Energy to merge in a deal valued at $2.9 billion
2. Grey Wolf, Basic Energy Services To Combine Into $2.9 Bln Entity - Update [GW] - RTTNews, Today's Top Stories, Global Newswires, ToDay's Top News,Global Business news .
3. UPDATE 1-Grey Wolf, Basic Energy agree to merge | Markets | Reuters
4. Grey Wolf, Basic Energy Services decide to merge | Chron.com - Houston Chronicle
5. Grey Wolf, Inc. and Basic Energy Services, Inc. Agree to Combine in ''Merger of Equals'' Transaction
6. Grey Wolf, Basic Energy to merge - Houston Business Journal:
7. Grey Wolf And Basic Energy Services Reach Merger Deal [GW] - RTTNews, Today's Top Stories, Global Newswires, ToDay's Top News,Global Business news .
8. SunHerald.com : Grey Wolf, Inc. and Basic Energy Services, Inc. Agree to Combine in 'Merger of Equals' Transaction
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