(Adds details from statements, background, share movement)
June 25 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
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)