Nabors To Merge Well Maintenance Business With C&J Energy In $2.9 Bln Deal

(RTTNews) - Oilfield services provider Nabors Industries Ltd. (NBR) agreed Wednesday to merge its well maintenance business with C&J Energy Services, Inc. (CJES) in a cash and stock deal valued at about $2.86 billion. The deal, which has the approval of the board of directors of both companies, is expected to close by the end of 2014, primarily subject to approval by C&J shareholders.

"I view the creation of this new company as a formidable player which will meaningfully enhance shareholder value for each company. C&J Energy Services is a highly respected and vertically-integrated premier operator, run by a very capable management team," Nabors' Chairman, President and CEO Anthony Petrello said in a statement.

The deal will see Nabors's completion-and-production businesses in the U.S. and Canada merge with C&J Energy Services to form a combined entity named C&J Energy Services Ltd., which will be headquartered in Bermuda and listed on the New York Stock Exchange under the ticker symbol 'CJES.'

Nabors said the deal will create "a leading oilfield services provider with increased critical mass, broader geographic presence and strong international potential." It will also help Nabors sharpen its focus on its drilling businesses and enhance its financial position.

The deal will create one of the largest completion-and-production-services operations in North America, with the second largest workover/well-servicing fleet. It will also help C&J's prospects for international expansion through a global alliance agreement with Nabors.

As consideration, Nabors said it will receive a 62.5 million shares or 53 percent ownership in the combined company and about $940 million cash, which will be paid from proceeds of a public debt placement by the combined company. Meanwhile, existing C&J stockholders will own about 47 percent of the combined company.

C&J Energy noted that it has secured a $1.3 billion fully underwritten financing commitment from Citi to finance the cash portion of the deal and refinance existing indebtedness. C&J has also secured a $600 million commitment on a new credit facility that is expected to be undrawn following the closing of the transaction.

The deal is expected to add to C&J Energy's cash earnings per share during the first full year of the combined company. It is also projected to generate annual run-rate synergies of more than $100 million that is expected to be fully realized by 2017.

The combined company will be led by C&J Energy Founder, Chairman and CEO Josh Comstock and the current C&J management team along with the completion and production services management and staff of Nabors. Randy McMullen will remain as president and CFO. The board of the combined company will consist of seven members, with Comstock serving as chairman.

"This transaction is the culmination of the comprehensive strategic review process Nabors began last year. While we still believe in the long-term value of these elements of our business, particularly in light of the reemergence of growth following a two-year down cycle, we saw this transaction as the most expeditious way to demonstrate their real value," Petrello added.

Goldman, Sachs & Co. and Lazard Ltd. advised Nabors on the transaction, while Citigroup and Tudor, Pickering, Holt, & Co. represented C&J Energy Services.

NBR closed Wednesday's regular trading session at $27.30, up $0.50 or 1.87% on a volume of 3.95 million shares, and it added another $1.25 or 4.58% in after-hours trading. CJES closed at $32.81, up $1.17 or 3.70% on a volume of 0.35 million shares, and it added another $4.19 or 12.77% in after-hours trading.