Expro snaps up US rival for $675m

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The Independent Online

Expro, the oilfield services company, has bought Power Well Services of the US for $675m (£365m) to create the world's largest well-testing business.

Expro shares fell 11 per cent to close down 78.5p at 636p yesterday as the London-based company announced plans for a deeply discounted rights issue to fund the acquisition.

Under the terms of the transaction, Expro will issue 9.156 million shares, valued at $115m, to Power Well's private equity owner, First Reserve. The rest will be paid in cash raised through bank loans and the sale of the shares.

The acquisition, described as a "transformational deal" by Expro's chief executive, Graeme Coutts, will take the company's share of the global oil-well-testing market from 15 to 20 per cent to a little more than 50 per cent. That means it will be running head to head with its US rival Schlumberger, the world's largest oil services company.

Expro intends to raise £128m through a five-for-14 rights issue at 500p a share, implying an adjusted value of about 600p a share yesterday. It will issue 27.2 million new shares, representing 24 per cent of the group's enlarged share capital.

Mr Coutts said: "We've gone from being farmers to very much a hunting mode. This is a big deal for Expro." He predicted the integration of the two businesses would take 12 months. Mr Coutts also ruled out big reductions in the combined 3,700-strong workforce, saying the two companies would complement each other. "This is a synergy and growth story. Both businesses are stretching their capacity. Cost cutting is not where we are at," he said.

Power Well, based in Houston, Texas, posted revenues of $204m and an operating profit of $19m last year. Its assets are worth $381m.

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