National Oilwell Varco to Acquire CE Franklin for CAD$12.75 Per Common Share
CE Franklin Ltd. (NASDAQ: CFK; TSX: CFT) ('CE Franklin')
announced today that it has entered into an arrangement agreement (the 'Arrangement
Agreement') with a wholly owned National Oilwell Varco, Inc. ('NOV')
subsidiary, NOV Distribution Services ULC ('NDS'),
pursuant to which, NDS has agreed to acquire all of the issued and
outstanding common shares (the 'Common Shares') of CE
Franklin for consideration of CAD$12.75 in cash per Common Share. The
transaction will be implemented by way of a statutory plan of
arrangement (the 'Arrangement').
The total consideration payable under the Arrangement is approximately
CAD$240 million. The consideration per Common Share represents a 36%
premium to the closing price of the Common Shares on the TSX on May 30,
2012 and a 36% premium to the volume weighted average price of the
Common Shares on the TSX over the 20-day period prior to April 17, 2012,
when the Company announced that it was conducting a review of strategic
alternatives.
The board of directors of CE Franklin (the 'CE Franklin Board'),
after receiving the recommendation of the special committee of the CE
Franklin Board has, other than abstaining directors, unanimously
approved the Arrangement and the entering into of the Arrangement
Agreement. CIBC World Markets Inc., CE Franklin's financial advisor, has
provided the CE Franklin Board with its opinion to the effect that,
subject to certain assumptions, limitations and qualifications set forth
therein, the consideration to be received by the holders of Common
Shares pursuant to the Arrangement is fair, from a financial point of
view, to such holders. CE Franklin's largest shareholder, Schlumberger,
and all of the members of the CE Franklin Board and CE Franklin's
executive officers, who collectively own approximately 57% of the
outstanding Common Shares, have agreed to vote their Common Shares in
favour of the Arrangement in accordance with the terms of the support
agreements entered into in respect of the Arrangement. The support
agreements will terminate in the event the Arrangement Agreement is
terminated in accordance with its terms.
Mr. Pete Miller, NOV's Chairman, President and CEO, said, 'The addition
of CE Franklin to NOV's Canadian distribution operations will broaden
our product offering and customer base, while strengthening our combined
abilities to serve all of our customers. We look forward to welcoming
the CE Franklin team of professionals to National Oilwell Varco. We
expect CE Franklin's high level of service and support to enhance our
opportunities to provide a wide range of products to the growing
Canadian marketplace, for the benefit of both our customers and
employees.'
Mr. Michael West, President and Chief Executive Officer of CE Franklin,
commented, 'This transaction brings our shareholders significant value
and the opportunity for our organization to integrate with a global
leader to provide a strong platform for enhanced client service and
expanded opportunities for our employees.'
Completion of the Arrangement is subject to a number of conditions
including, but not limited to, the approval of at least 66?% of the
votes cast in person or by proxy at a special meeting of CE Franklin's
shareholders, as well as customary court and regulatory approvals. The
special meeting of CE Franklin shareholders is expected to be held in
mid-July. An information circular in connection with the Arrangement
will be mailed to CE Franklin shareholders in June. The CE Franklin
Board unanimously, other than abstaining directors, recommends that
shareholders vote in favour of the Arrangement. Subject to satisfaction
or waiver of conditions precedent to closing, including receipt of
required regulatory approvals, closing is expected to occur shortly
following the special meeting.
Under the Arrangement Agreement, CE Franklin has agreed that it will not
solicit, initiate or participate in any discussions concerning any other
acquisition proposals subject to the ability of the CE Franklin Board to
respond to superior proposals. CE Franklin has also agreed to pay a
termination fee of CAD$7.5 million in certain circumstances, including
if the Arrangement Agreement is terminated by CE Franklin in order to
accept a superior proposal. In addition, NDS has the right to match any
competing superior proposal for CE Franklin in the event such proposal
is made.
Concurrent with the entering into of the Arrangement Agreement, the
shareholder rights plan adopted by CE Franklin on April 18, 2012 has
been terminated.
In connection with this transaction, CIBC World Markets Inc. acted as
the exclusive financial advisor to CE Franklin. In addition, Norton Rose
Canada LLP acted as legal advisor to CE Franklin, Burnet Duckworth &
Palmer LLP acted as legal advisor to the special committee of the CE
Franklin Board, Fraser Milner Casgrain LLP acted as legal advisor to NOV
and Davies Ward Phillips & Vineberg LLP acted as legal adviser to
Schlumberger.
About CE Franklin
For more than 75 years, CE Franklin has been a leading supplier of
products and services to the energy industry. CE Franklin distributes
pipe, valves, flanges, fittings, production equipment, tubular products
and other general oilfield supplies to oil and gas producers in Canada
as well as to the oil sands, refining, heavy oil, petrochemical,
forestry and mining industries. These products are distributed through
its 39 branches, which are situated in towns and cities serving
particular oil and gas fields of the western Canadian sedimentary basin.
About NOV
National Oilwell Varco is a worldwide leader in the design, manufacture
and sale of equipment and components used in oil and gas drilling and
production operations, the provision of oilfield services, and supply
chain integration services to the upstream oil and gas industry.
Forward-looking Statements: The information in this news
release may contain 'forward-looking statements' within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934; within the meaning of Canadian
securities law and other applicable securities legislation. All
statements, other than statements of historical facts, that address
activities, events, outcomes and other matters that CE Franklin plans,
expects, intends, assumes, believes, budgets, predicts, forecasts,
projects, estimates or anticipates (and other similar expressions) will,
should or may occur in the future are forward-looking statements. These
forward-looking statements are based on management's current belief,
based on currently available information, as to the outcome and timing
of future events. When considering forward-looking statements, you
should keep in mind the risk factors and other cautionary statements and
refer to the Form 20-F or our annual information form for further detail.
CE Franklin Ltd.
Investor Relations, 800-345-2858 or
403-531-5604
investor@cefranklin.com
or
National
Oilwell Varco
Clay Williams, 713-346-7606
clay.williams@nov.com
