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June 25 (Reuters) - Oilfield services provider Nabors Industries Ltd will merge its well maintenance business with C&J Energy Services Inc and receive $2.86 billion in cash and stock.
After the deal, Nabors will own about 53 percent of the combined company, which will be listed on the New York Stock Exchange as C&J Energy Services Ltd, the companies said in separate statements on Wednesday.
Nabors will get about $937 million in cash and some 62.5 million shares of the combined company, which will be managed by the current C&J Energy management team and run by C&J's current chief executive officer, Josh Comstock.
Nabors's completion and production services business maintains oil wells throughout their life spans and also provides services to plug and abandon the wells.
The deal will add to C&J Energy's cash earnings per share during the first full year of combined operations, it said.
C&J shares jumped 20 percent to $39.50 in trading after the bell. Nabors shares rose 5.5 percent to $28.79 in post-market trading.
Under the terms of the agreement, Nabors will sell its completion and production services business in the United States and Canada to an existing Bermuda unit. A Delaware subsidiary of the unit will then merge with and into C&J Energy, which will survive the merger as a subsidiary of the Bermuda unit.
The companies are using a deal structure known as Reverse Morris Trust - a transaction that allows a parent company to sell its unit in a tax-efficient manner.
In that structure, a company spins off a unit that it wants to divest and that unit merges with a smaller company, but the smaller company runs the combined entity.
C&J said it has secured a $1.3 billion loan commitment from Citi to finance the cash portion of the transaction and refinance existing debt.
Citi acted as C&J's financial adviser. Tudor, Pickering, Holt & Co gave a fairness opinion to C&J, while Vinson & Elkins L.L.P. acted as its legal adviser. Fried, Frank, Harris, Shriver & Jacobson LLP acted as tax counsel.
Goldman, Sachs & Co and Lazard Ltd advised Nabors on the transaction. Nabors' legal adviser was Milbank. (Reporting by Sayantani Ghosh in Bangalore; Editing by Savio D'Souza and Leslie Adler)