National Oilwell Varco agrees buy CE Franklin for $240m

National Oilwell Varco Inc. (NYSE:NOV), an American oilfield equipment and services provider, will acquire CE Franklin Ltd (TSE:CFT), a Canadian oil & gas equipment distributor, for CAD12.75 a share, or CAD240m in total, CE Franklin confirmed.

The buyer will add CE Franklin to its Canadian distribution business, widening its product offering and customer base in the growing Canadian market, chairman and president, Pete Miller, said.

CE Franklin’s president and CEO, Michael West, said in his comment that apart from providing significant value to shareholders, the deal ensures for his company the chance to become part of a global sector leader and boost client service, while increasing opportunities for employees.

The offered price, a premium of 36% to CE Franklin’s closing on 30 May, was considered fair by the target’s board and its financial advisor CIBC World Markets Inc, which recommended shareholders to accept it.

Schlumberger Ltd (NYSE:SLB), CE Franklin’s largest shareholder, together with the company’s directors and executive officers pledged to vote their combined 57% of the company shares in favour of the transaction.

The US buyer needs to secure at least 66% of the votes at a special meeting of CE Franklin shareholders to be held in mid-July, as well as regulatory approvals.

Completion is seen to occur shortly after the shareholders meeting.

CE Franklin, through 39 branches in western Canada, distributes pipe, valves, flanges, fittings, production equipment, tubular products and other general oilfield supplies to local oil and gas producers, as well as to the oil sands, refining, heavy oil, petrochemical, forestry and mining sectors.