CALGARY, May 30, 2012 /PRNewswire/ - 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 66⅔% 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.
SOURCE CE Franklin Ltd.