Buyout firm Candover and oil service company Halliburton in billion dollar bidding war for Expro International

The galloping prices of oil may offer some explanation towards the galloping prices offered by competing bidders towards a maker of drilling equipment, with rival bids increasing by the day. The latest $3.4 billion offer by Candover Partners Ltd for for UK oilfield-services provider Expro International Group Plc represents an eight per cent premium over the last $3.36 billion offered by Halliburton Co., which in turn was made to surpass Candover's $3.2 billion bid.

Both buyout firm Candover and oil services company Halliburton are quite insistent on acquiring Expro. The bidding war has started and more battles could follow, given the relatively small spread between the bids and the competitors' desire to extend their international reach and product portfolios. The Candover offer, made in association with Goldman Sachs, represents a cash bid of £15.50 per share,, trumping Halliburton's offer of £15.25 a share.

In light of this latest development, Expro's shares jumped 5.5 per cent to £16.26 in London trading on Friday. At the same time, Halliburton's shares fell 51 cents to close at $47.77 on the New York Stock Exchange. This 1.1 per cent fall is quite in contrast to the 27 per cent gain it has so far experienced, quite in contrast to the broader market.

Halliburton, the world's No. 2 oil field services company behind Schlumberger, first expressed interest in Expro in April, a day after Candover made its $3.2 billion bid. Unlike Candover, Halliburton has yet to make a binding offer, but instead submitted a less formal indication of what it would pay pending review of Expro's financials, according to spokesmen for the two companies.

In a statement, Halliburton said it is continuing discussions with the board of Expro and "strongly urges Expro shareholders to take no action at this time." The Candover bid is scheduled for a vote by Expro shareholders on 2nd June. Halliburton would have until 20th June to revise its offer. Expro's independent directors, who unanimously agreed to back the new offer, are released from their pledge should there be a rival bid at least 12.5 percent higher, according to the statement by Candover and Goldman.

Oil-services acquisitions are accelerating as record crude prices drive a $98.7 billion binge in exploration spending this year by Exxon Mobil and its five largest Western rivals. Services stocks are outpacing gains by oil producers as the cost of finding and developing new petroleum deposits climbs and contractors secure long-term projects ensuring revenue growth. The 15-member Philadelphia Oil Service Sector Index, a benchmark for US oilfield contractors, has climbed 11 per cent this year, five times the gain by major US oil producers.