Canada's largest oilfield-services provider Precision buys American peer for $2.02 billion

25 August 2008

Precision Drilling Trust, Canada's largest oilfield-services provider, is acquiring Grey Wolf Inc. for $2.02 billion to enhance its presence in the larger and stronger US market. While $1.12 billion of the outlay will be in cash, Precision will also issue 42 million units valued at $896.7 million, based on Friday's closing stock price.

Stockholders of Grey Wolf, based in Houston, will get $5 and 0.1883 trust unit per share, the companies said today in a statement. That's $9.02 a share as of 22 August, a premium of 4.8 per cent and less than an earlier June bid of $10 a share, which Grey Wolf spurned.

Grey Wolf shareholders will own 25 per cent of the combined company and three of its directors will join the Precision board at closing. A vote of Grey Wolf shareholders on the deal will be held by year-end, the companies said.

Calgary-based Precision said that the deal would be "highly accretive" to its cash flow and that Grey Wolf shareholders will receive proxy statements by the end of the third quarter. They didn't say when the deal is expected to close.

"The combination of Grey Wolf's deep-drilling capabilities and Precision's high-performance systems and technology provides a foundation for immediate international expansion to pursue global oil-drilling opportunities," the companies said in a joint statement.

Acquisitions of oilfield-services providers and drillers accelerated this year as record oil prices raised demand for rigs and support equipment. (See: Buyout firm Candover and oil service company Halliburton in billion dollar bidding war for Expro International)