LONDON (Dow Jones Newswires), May 20, 2008
Oilfield services company Expro International Group PLC (EXR.LN) Tuesday said Halliburton Co. (HAL) continues to carry out due diligence, which may or may not lead it to make an offer for Expro.
Expro, which has agreed to be acquired by a consortium of private equity funds for about GBP1.6 billion, has also attracted the interest of oilfield services giant Halliburton, which has said it is considering trumping the bid with a higher, all-cash offer once it completes due diligence.
Expro made the comments alongside a strong set of full-year earnings amid soaring oil prices and rising global energy demand, particularly in India and China.
For the year ending March 31, Expro reported a 45% increase in net profit attributable to equity shareholders of GBP49.3 million, compared with GBP34.1 million a year earlier.
Expro said underlying net profit attributable to equity shareholders, before exceptional items and amortization, was up 40% at GBP52.8 million, compared with GBP37.9 million a year earlier.
The company said revenue came in 18% higher than in the previous year at GBP609.7 million, compared with GBP518.8 million.
Underlying diluted earnings per share were 47.5 pence, compared with 37.3 pence a year earlier.
Evolution Securities said in a note that while Expro's results are strong, the numbers mean little in the context of possible competing bids for the company.
"The results have little significance other than to confirm that the underlying business is doing well," the Evolution note said. "Halliburton continues to be interested and continues to carry out due diligence."
However, Evolution sees little upside with a new offer, and recommends taking profits at current share price levels. Evolution has a reduce recommendation and 1,435 pence target.
A London-based analyst, who declined to be named, said Expro's results exceed expectations and that the company has benefited from buoyant market conditions during the year and the outlook for the company remains strong.
On April 17, Expro said it had accepted an all-cash 1,435 pence a share offer offer by Umbrellastream Ltd., a consortium of funds led by British private equity firm Candover Partners Ltd. together with Goldman Sachs Capital Partners and Alpinvest Partners N.V.. The next day, Halliburton said it was in discussions with Expro.
Recent press speculation has suggested that Halliburton may make an offer this week, or at least before Expro's scheduled extraordinary general meeting to consider Umbrellastream's offer.
JPMorgan Cazenove is acting as financial adviser to Expro.
The potential takeover battle comes as oil services companies ramp up activity amid soaring energy prices and rising demand, which has caused a flurry of activity in the sector.
Analysts - who expect more merger-and-acquisition activity in the sector - say the rising cost of raw materials, drilling rig rental and skilled labor shortages have contributed to the rise of the price of oil above $125 a barrel.
Expro stock closed flat on the day at 1,540 pence Monday, giving the company a market capitalization of about GBP1.7 billion. The company's shares are up about 50% since the start of the year.
Expro shares traded down 0.6%, or 9 pence lower, at 1,531 pence at 1000 GMT, in a slightly lower U.K. market.
Copyright (c) 2008 Dow Jones & Company, Inc.
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