UPDATE 3-Grey Wolf rejects Precision Drilling a third time
(Adds Precision Drilling statement, updates share prices)
NEW YORK/CALGARY, June 27 (Reuters) - Oil driller Grey Wolf Inc GW.A on Friday rejected Precision Drilling Trust's (PD_u.TO) offer to buy the company for the third time, saying the twice-sweetened bid of $1.78 billion, or $10 a share, still undervalues Grey Wolf.
Grey Wolf also said its proposed takeover of Basic Energy Services Inc (BAS.N) offers a better value for its shareholders than a combination with Precision Drilling.
Precision Drilling, Canada's largest oil and gas drilling contractor, launched an unsolicited $9-a-share bid for Grey Wolf on June 10. Grey Wolf rebuffed the Canadian company at that price on June 12 and at $9.30 a share on June 17.
Precision returned with the bid of $10 for each of Grey Wolf's 178 million shares outstanding earlier this week, saying it would be its final offer for the contract driller.
In a statement issued late on Friday, Precision said it would re-approach Grey Wolf's board if the merger agreement with Basic was terminated.
Grey Wolf shares were trading at about $8.30 before Precision Drilling's original offer. They rose as high as $9.55 after Precision made its latest bid.
Grey Wolf argued that the latest offer only values the company at about 12 times 2009 earnings, below the median valuation of its competitors.
It also said it believes the outlook for the Canadian drilling and well-service market is negative and the long-term value of Precision Drilling's units is questionable.
Precision CEO Kevin Neveu told Reuters his company had no plans to raise its bid again.
"We tried to put something in front of the board that they would view as being a good, superior offer. Clearly we didn't get there," Neveu said. "In any event ... we're here -- we're not going away. We'll leave it to the shareholders to decide what they want to do."
Precision has no plans to mail an offer directly to Grey Wolf shareholders. But investors would have a chance to voice any displeasure with the company by voting against its merger with Basic Energy at a special meeting on July 15.
Grey Wolf agreed to buy Basic in April in a bid to combine its land drilling rig fleet with Basic's land-based well-servicing equipment.
Grey Wolf shares fell 39 cents, or 4.3 percent, to $8.78 on the American Stock Exchange. Precision Drilling units rose 64 Canadian cents to C$27.64 on the Toronto Stock Exchange. (Reporting by Michael Erman in New York and Jeff Jones in Calgary, editing by Richard Chang and Braden Reddall)
