LONDON (Reuters) - Funds managed by private equity firm Candover (CDI.L) and investment bank Goldman Sachs (GS.N) have raised their offer for Expro International EXR.L, valuing the UK oil services company at 1.71 billion pounds ($3.4 billion).
The move followed news earlier on Friday that Expro had received a higher approach at 1,525p per share from U.S. rival Halliburton (HAL.N).
The independent directors of Expro said they recommended the new cash offer from Candover and Goldman Sachs, having on April 17 agreed to a bid of 1.61 billion pounds worth 1,435 pence per share from the same party.
Fast-growing Expro had said the proposal from Halliburton, the world’s second-biggest oil services company behind Schlumberger (SLB.N), was subject to conditions.
Expro shares, up six fold in the past four years, were up 5.1 percent at 1,620 pence following the revised agreement with Candover and Goldman.
Oil and gas industry services providers such as Expro have benefited as record energy prices prompt companies to boost spending on exploration and development of reserves.
This has attracted bidding interest from private equity firms and trade buyers for oil field services firms, with the tussle for Expro following other deals in the sector.
On April 18, the day after Expro agreed to the Candover and Goldman bid, Halliburton announced it was mulling a counter bid, saying, “The offer would be based on Halliburton’s analysis of synergy and other benefits that could be derived from combining its business with Expro and consistent with the company’s previously espoused strategy of making acquisitions which are accretive to shareholder value”.
Evolution Securities analyst Keith Morris said that from a share price point of view “we are there, or thereabouts” and that Halliburton, as a trade buyer, should be able to pay more than private equity which cannot extract any synergies.
Export’s key attraction is its proprietary technology for oil-well maintenance, which is still in testing and whose value depends on bidders taking a gamble on its future, analysts say.
Export’s system could dramatically cut the costs of fixing oil wells because it allows this to be done from a supply ship, rather than from rigs that are expensive to hire and take a long time to move to site.
Halliburton, through its leading role in offering oilfield services to a global client base of oil companies, is in a stronger position than most to exploit the benefits of Export’s new technology.
Halliburton had faced a de facto deadline of June 2, when Expro is due to hold a shareholder meeting to vote on the Candover deal, the latest in a series in the sector.
Last September General Electric (GE.N) agreed to buy UK oil services company Sounded, while in December U.S. private equity firm First Reserve agreed to buy Abbot Group.
Additional reporting by Mike Elliott; Editing by Richard Hubbard, Greg Malice