Union Drilling, Inc., a land drilling services and equipment contractor headquartered in Fort Worth, Texas, and Sidewinder Drilling Inc., a Houston-based land drilling company controlled by Avista Capital Partners, Tuesday announced that the two companies have entered into a definitive agreement and plan of merger pursuant to which Sidewinder will acquire all of the outstanding shares of Union Drilling common stock in an all-cash tender offer valued at approximately $242 million.
Under the terms of the agreement and plan of merger, which has been unanimously approved by Union Drilling's Board of Directors, Sidewinder's acquisition subsidiary, Fastball Acquisition, Inc. ("Fastball"), will commence a cash tender offer to purchase all of the outstanding shares of Union Drilling for $6.50 per share. The purchase price represents a premium of 40.0% over the 60-day volume weighted average share price of Union Drilling and a premium of 26.8% over the 30-day volume weighted average share price of Union Drilling as of Monday, September 24, 2012, the last full trading day before today's announcement.
The tender offer and the merger are subject to customary closing conditions set forth in the agreement and plan of merger, including the satisfaction of the minimum tender condition in the tender offer that 67.2% of Union Drilling's outstanding shares on a fully diluted basis be tendered to Sidewinder's merger subsidiary and the expiration or early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. In the event that the minimum tender condition is not met, and in certain other circumstances, the parties have agreed to complete the transaction through a one-step merger after receipt of Union Drilling stockholder approval. Sidewinder has received voting agreements with certain Union Drilling stockholders representing 51% of the outstanding shares of Union Drilling to vote in favor of the transaction. The closing of the transaction is expected in the fourth quarter of 2012.
The Board of Directors of Union Drilling has unanimously determined that the offer and the merger are in the best interests of Union Drilling's stockholders and will recommend that Union Drilling stockholders accept the offer and tender their shares in the offer when it is made.
"This transaction with Sidewinder recognizes the value of Union Drilling's land drilling equipment, scale, scope of operations and its talented and hard-working employees," said Christopher D. Strong, President and Chief Executive Officer of Union Drilling. "It also delivers a significant premium to our loyal shareholders and allows our employees to continue to deliver on our strategic goal of revitalizing our fleet and investing in people, processes and equipment."
Jon C. Cole, Chairman and CEO of Sidewinder, commented, "The acquisition of Union Drilling is strategically complementary for Sidewinder as it significantly increases our scale of operations, geographically broadens our exposure in the North American shale plays, meaningfully expands our customer base and provides substantial synergies. After we complete our acquisition of Union Drilling, we will have the scale and skilled workforce necessary to more effectively serve our customers in multiple geographies."
Sidewinder has obtained fully committed financing, and the transaction is not subject to a financing condition.
RBC Capital Markets is acting as exclusive financial advisor, and Davis Polk & Wardwell LLP is serving as special counsel to Union Drilling. Vinson & Elkins LLP is Sidewinder's legal counsel. The debt financing commitment for the transaction has been provided by Jefferies and its affiliates, and Latham & Watkins LLP is acting as legal counsel to the lenders.
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