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Keane and C&J to combine in ‘merger of equals’
Posted on Tuesday, 18 June 2019 10:41
Oilfield services providers Keane Group and C&J Energy Services have announced plans to join forces and create one of the largest US-based well companies worth around USD 1.80 billion, including USD 255.00 million of net debt. The deal is being described as a merger of equals and under the terms of the agreement, C&J will receive 1.61 shares of Keane common stock for every one held in the company with each business to control a 50.0 per cent stake following completion. Combined, the two companies will be a leading well completion and production group, with increased scale and density across services and geographies and a prominent presence in most active US basins. On a pro forma basis, Keane and C&J have adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) of USD 636.00 million on net revenue of USD 4.20 billion in the year ended 31st March 2019. Furthermore, the groups are expecting annualised run-rate cost synergies of USD 100.00 million within 12 months after completion, with about USD 173.00 million in cash, or USD 106.00 million after the USD 1.00 per share cash dividend is paid to C&J shareholders. Together, the combined business will have 2.30 million hydraulic fracturing horsepower consisting of about 50 frac fleets, 158 wireline trucks and 81 pumpdown units, among other services. Closing of the merger is expected in the fourth quarter of 2019, following shareholder, regulatory and other approvals. According to Zephyr, the M&A database published by Bureau van Dijk, there have been 487 deals targeting the oil and gas extraction sector announced worldwide in 2019 to date. The largest of these involves Occidental Petroleum agreeing to buy Anadarko Petroleum for USD 57.00 billion. The buyer will receive USD 10.00 billion from Berkshire Hathaway, in the second-biggest transaction, if the acquisition is successful. Devon Canada’s assets, ConocoPhilips’ UK oil and gas division, Russia-based Arktik and US-based Covey Park Energy, among others, have also been targeted. © Zephus Ltd