Smith International, W-H Energy Enter Merger Agreement
Smith International, Inc. and W-H Energy Services, Inc. announced a strategic combination that will broaden Smith’s capabilities across key drilling and completion product and service offerings. Under the terms of the definitive merger agreement unanimously approved by both companies’ Board of Directors, Smith will acquire W-H Energy in exchange for cash consideration of $56.10 and the issuance of 0.48 Smith common shares for each W-H Energy share outstanding. Based on yesterday’s closing Smith share price, the transaction is valued at $93.55 per W-H Energy share and results in a total transaction value of approximately $3.2 billion.
The addition of W-H Energy’s product and service lines are a logical extension of Smith’s current product portfolio and provides entry into directional drilling services, one of the oilfield service industry’s fastest growing markets. The combined companies’ product capabilities will enable Smith to offer a full suite of products and services from the rig floor to the drill bit. The transaction helps create a stronger oilfield service franchise and is expected to be immediately accretive to earnings and cash flow per share, excluding the impact of any transaction-related charges.
“I’m thrilled that Ken White, W-H Energy’s Chief Executive Officer, and W-H Energy’s Board of Directors and management team decided to merge with Smith," said Doug Rock, CEO of Smith. "The combined companies should be significantly strengthened in both drilling and completion product and service offerings. From a drilling and evaluation perspective, the W-H Energy team has developed world-class products for logging-while-drilling, measurement-while-drilling, rotary steerable systems, directional drilling and downhole drilling motors, as well as, trained a highly skilled cadre of directional drillers and technical support people to operate these systems. In addition, through their focus on people and technology, W-H Energy has also achieved broad success in its other business lines such as rental tools, cased-hole wireline, coiled tubing and fluids-related products and services. We look forward to growing our businesses together.”
"Smith provides us the opportunity to increase the growth rate of our directional drilling services through its strong international presence," said Ken White, CEO of W-H Energy. "In addition, we bring new service lines to Smith's existing product and service portfolio which further diversifies and balances the sources of its revenue and income."
Smith currently has approximately 200.9 million net outstanding common shares and is expected to issue approximately 15.5 million new shares to W-H Energy equity holders. Upon completion of the transaction it is anticipated that the current stockholders of Smith will own 93 percent of the company and the current shareholders of W-H Energy will own 7 percent.
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Company: W-H Energy Services more info
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