Grey Wolf rejects third Precision bid
Three-month TSX trading in Precision Drilling units
Drilling company Grey Wolf Inc. of Houston has rejected the third takeover offer from Precision Drilling Trust.
Calgary-based Precision's $2.2-billion US, or $10-a-share, bid — a mixture of cash and Precision units — doesn't offer Grey Wolf shareholders more than its pending merger with Basic Energy Services Inc., the company said in a news release Friday.
Grey Wolf's directors said Precision's third offer, characterized as a final, non-negotiable bid, was lacking on several fronts:
It undervalued Grey Wolf.There is "considerable uncertainty" about the long-term value of Precision's trust units.There is a "negative outlook" for Canadian drilling and well service markets.The market price of Precision units could fall if the deal went ahead.Precision may not invest as much capital as it should because of its debt and need to make cash distributions.Precision made its first offer, at $9.30 a share, for Grey Wolf on June 10. It was rejected, and then Precision upped its bid, which was again rejected.
On June 25, Precision offered $10 a share, up to half cash and half Precision units. It said the offer was 34 per cent above Grey Wolf's closing price in the 30 days before it received Precision's first bid.
Grey Wolf stock slipped 39 cents to $8.78 in New York trading. Precision units rose 64 cents to $27.64 Cdn.
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