Nabors Industries agreed to acquire Tesco Corporation this week in an all-stock transaction, saying the combined entity will offer global customers more fit-for-purpose products, services and solutions.
Nabors, which has the world’s largest fleet of land drilling rigs, says the deal is expected to accelerate automation and integration of tubular services into Nabors rigs.
The complementary portfolios will enable further improvements in operational efficiency, scaling up the development of innovative equipment on Nabors’ new generations of rigs while upgrading its older classes of rigs, the company says.
“Nabors is uniquely positioned to further deploy Tesco's premium casing running tools and automation technologies globally,” Nabors CEO Anthony Petrello said in a statement.
“The incremental cash flow and the realization of expected synergies combined with Tesco's solid balance sheet will further strengthen our financial position,” he added.
First year operating synergies are expected to approach $20 million with full run-rate operating synergies of $30 million to $35 million, according to Nabors.
The combined entity is also expected to realize capital savings from facility rationalization and the planned build out of the casing running operation.
The transaction values Tesco common stock at $4.62 per share based on the closing price of Nabors shares on the New York Stock Exchange on Aug. 11, 2017, which represents a 19 per cent premium for the Tesco shares.
Both company boards of directors have approved the deal. Subject to regulatory approval and the customary closing conditions, the deal is expected to close in the fourth quarter.