National Oilwell Varco to Acquire CE Franklin for CAD$12.75 Per Common Share
May 30 2012 - 4:52PM
Business Wire
CE Franklin Ltd. (NASDAQ: CFK; TSX: CFT) ("CE
Franklin") announced today that it has entered into an
arrangement agreement (the "Arrangement Agreement") with a
wholly owned National Oilwell Varco, Inc. ("NOV") subsidiary,
NOV Distribution Services ULC ("NDS"), pursuant to
which, NDS has agreed to acquire all of the issued and outstanding
common shares (the "Common Shares") of CE Franklin for
consideration of CAD$12.75 in cash per Common Share. The
transaction will be implemented by way of a statutory plan of
arrangement (the "Arrangement").
The total consideration payable under the Arrangement is
approximately CAD$240 million. The consideration per Common Share
represents a 36% premium to the closing price of the Common Shares
on the TSX on May 30, 2012 and a 36% premium to the volume weighted
average price of the Common Shares on the TSX over the 20-day
period prior to April 17, 2012, when the Company announced that it
was conducting a review of strategic alternatives.
The board of directors of CE Franklin (the "CE Franklin
Board"), after receiving the recommendation of the special
committee of the CE Franklin Board has, other than
abstaining directors, unanimously approved the Arrangement and the
entering into of the Arrangement Agreement. CIBC World Markets
Inc., CE Franklin's financial advisor, has provided the CE Franklin
Board with its opinion to the effect that, subject to certain
assumptions, limitations and qualifications set forth therein, the
consideration to be received by the holders of Common Shares
pursuant to the Arrangement is fair, from a financial point of
view, to such holders. CE Franklin's largest shareholder,
Schlumberger, and all of the members of the CE Franklin Board and
CE Franklin's executive officers, who collectively own
approximately 57% of the outstanding Common Shares, have agreed to
vote their Common Shares in favour of the Arrangement in accordance
with the terms of the support agreements entered into in respect of
the Arrangement. The support agreements will terminate in the event
the Arrangement Agreement is terminated in accordance with its
terms.
Mr. Pete Miller, NOV's Chairman, President and CEO, said, "The
addition of CE Franklin to NOV's Canadian distribution operations
will broaden our product offering and customer base, while
strengthening our combined abilities to serve all of our customers.
We look forward to welcoming the CE Franklin team of professionals
to National Oilwell Varco. We expect CE Franklin's high level of
service and support to enhance our opportunities to provide a wide
range of products to the growing Canadian marketplace, for the
benefit of both our customers and employees."
Mr. Michael West, President and Chief Executive Officer of CE
Franklin, commented, "This transaction brings our shareholders
significant value and the opportunity for our organization to
integrate with a global leader to provide a strong platform for
enhanced client service and expanded opportunities for our
employees."
Completion of the Arrangement is subject to a number of
conditions including, but not limited to, the approval of at least
66⅔% of the votes cast in person or by proxy at a special meeting
of CE Franklin's shareholders, as well as customary court and
regulatory approvals. The special meeting of CE Franklin
shareholders is expected to be held in mid-July. An information
circular in connection with the Arrangement will be mailed to CE
Franklin shareholders in June. The CE Franklin Board unanimously,
other than abstaining directors, recommends that shareholders vote
in favour of the Arrangement. Subject to satisfaction or waiver of
conditions precedent to closing, including receipt of required
regulatory approvals, closing is expected to occur shortly
following the special meeting.
Under the Arrangement Agreement, CE Franklin has agreed that it
will not solicit, initiate or participate in any discussions
concerning any other acquisition proposals subject to the ability
of the CE Franklin Board to respond to superior proposals. CE
Franklin has also agreed to pay a termination fee of CAD$7.5
million in certain circumstances, including if the Arrangement
Agreement is terminated by CE Franklin in order to accept a
superior proposal. In addition, NDS has the right to match any
competing superior proposal for CE Franklin in the event such
proposal is made.
Concurrent with the entering into of the Arrangement Agreement,
the shareholder rights plan adopted by CE Franklin on April 18,
2012 has been terminated.
In connection with this transaction, CIBC World Markets Inc.
acted as the exclusive financial advisor to CE Franklin. In
addition, Norton Rose Canada LLP acted as legal advisor to CE
Franklin, Burnet Duckworth & Palmer LLP acted as legal advisor
to the special committee of the CE Franklin Board, Fraser Milner
Casgrain LLP acted as legal advisor to NOV and Davies Ward Phillips
& Vineberg LLP acted as legal adviser to Schlumberger.
About CE Franklin
For more than 75 years, CE Franklin has been a leading supplier
of products and services to the energy industry. CE Franklin
distributes pipe, valves, flanges, fittings, production equipment,
tubular products and other general oilfield supplies to oil and gas
producers in Canada as well as to the oil sands, refining, heavy
oil, petrochemical, forestry and mining industries. These products
are distributed through its 39 branches, which are situated in
towns and cities serving particular oil and gas fields of the
western Canadian sedimentary basin.
About NOV
National Oilwell Varco is a worldwide leader in the design,
manufacture and sale of equipment and components used in oil and
gas drilling and production operations, the provision of oilfield
services, and supply chain integration services to the upstream oil
and gas industry.
Forward-looking Statements: The information in this news
release may contain "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934; within the meaning of Canadian
securities law and other applicable securities legislation. All
statements, other than statements of historical facts, that address
activities, events, outcomes and other matters that CE Franklin
plans, expects, intends, assumes, believes, budgets, predicts,
forecasts, projects, estimates or anticipates (and other similar
expressions) will, should or may occur in the future are
forward-looking statements. These forward-looking statements are
based on management's current belief, based on currently available
information, as to the outcome and timing of future events. When
considering forward-looking statements, you should keep in mind the
risk factors and other cautionary statements and refer to the Form
20-F or our annual information form for further detail.
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