UK-based oilfield well services company Expro and drilling and completions solutions provider and Dutch-based Frank’s International on Thursday announced a definitive agreement under which the companies will combine in an all-stock transaction.
Upon the closing of the transaction, Expro shareholders will own approximately 65% of the combined entity, with Frank’s shareholders owning approximately 35%.
The combined company will assume the Expro Group name and be listed on the NYSE exchange under the symbol “XPRO”. The combined company will retain the Frank’s brand name for its well construction solutions.
“The combination brings together two companies with decades of market leadership, best-in-class safety and service quality performance, exceptional talent and global capabilities in well construction, well flow management, subsea well access, well intervention and production services. With a broad range of complementary, highly specialized equipment and services, the combined company will provide customers with cost-effective, innovative solutions across the well lifecycle, driving a stable, diverse revenue mix,” Expro said in a statement Thursday.
The combined company will have a strong, debt-free balance sheet, robust order backlog, more than $1 billion of pro forma annual revenue as well as an ability to generate through-cycle free cash flow and growth, the company added.
“This transaction unites two established industry players to create a leading service provider with an extensive portfolio of capabilities across the well lifecycle,” said Mike Jardon, Chief Executive Officer of Expro. “Together, Expro and Frank’s will be better positioned to support our customers around the world and navigate industry cyclicality. This business combination also allows us to rationalize facilities and other support costs, optimize business processes, capitalize on profitable growth opportunities and create value for shareholders of both companies, particularly as the environment for international projects continues to improve.”
Jardon said: “We expect the combined company’s scale, debt-free balance sheet and cash flow outlook will allow us to accelerate growth. This will be achieved through an enhanced ability to deliver integrated customer solutions and increased investments in digitalization, autonomous operations and other technologies.
“The combination of Expro and Frank’s also allows us to advance our commitment to a lower-carbon future, which is underpinned by our goals to maximize efficiency and improve our products and services to help the Company and its customers lower emissions. Finally, this transaction will unite two of the premier teams in the industry, and better allow us to attract, retain and develop the best workforce. We look forward to combining the strengths of our businesses and teams and building upon both companies’ proud track records of providing safe, reliable and cost-effective solutions and best-in-class service quality to Expro’s and Frank’s many customers.”
According to the statement released Thursday, the combined company will offer a balanced portfolio of services and solutions that meet customer needs across well construction, completions, production optimization and de-commissioning, in both onshore and offshore markets.
“Expro’s established position in North Africa, the Middle East and Asia markets will provide significant opportunities to expand Frank’s presence in these attractive regions. Similarly, the combined company will leverage Frank’s strong position in drilling and completions services throughout the Americas to deliver integrated customer solutions,” Expro said.
Expro also said that the combined company will remain committed to achieving a 50% reduction in carbon intensity by 2030, and net zero CO2 emissions by 2050.
The combined company is targeting approximately $55 million of annual run-rate cost synergies to be achieved in the first twelve months, ramping up to $70 million of annual cost savings within 36 months.
At closing, the combined company is expected to have approximately $285 million of cash. To supplement available liquidity, the companies expect to complete syndication of a revolving credit facility, which will be available for direct borrowings and letters of credit, of up to $250 million prior to the close of the transaction, Expro said.
Upon closing of the transaction, Expro Chief Executive Officer, Mike Jardon, will become Chief Executive Officer of the combined company and will be a member of the Board of Directors. Mike Kearney, Frank’s Chairman, President and Chief Executive Officer, will serve as Chairman of the combined company. Quinn Fanning will serve as Chief Financial Officer of the combined company, and the remainder of the new leadership team is expected to include representatives of both companies.
In addition to Mike Kearney and Mike Jardon, the remainder of the combined company’s nine-member Board of Directors will comprise five additional directors appointed by Expro and two additional directors appointed by Frank’s.
The combined company will be operationally headquartered in Houston, Texas, and will maintain a significant operating presence in Lafayette, Louisiana, Aberdeen, Scotland and other key locations around the world. The principal executive office of the combined company will remain in the Netherlands.
The transaction is expected to close in the quarter ending September 30, 2021, subject to approval by Frank’s and Expro shareholders and customary closing conditions, including required regulatory approvals.
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